What You Need to Know About 529 Plans
The cost of a college education has skyrocketed, and the result has been extensive student loan debt that has put a huge burden on graduates emerging from institutions of higher learning to find a way to make massive monthly loan repayments. Students and parents alike are always on the lookout for ways to make educational expenses easier to manage by preparing for costs well in advance. 529 plans are a key element that families can use to save for college and get valuable tax benefits, but there are a lot of things you need to understand about 529 plans to make the best use of them. In particular, the following facts are useful to help you choose the best 529 plan and to squeeze as many benefits as possible from your college savings.
Most 529 college savings plans are associated with a particular state. Many savers mistakenly believe that you must use your state's 529, but that isn't the case. You're always free to use a 529 from any state that allows nonresidents to participate, and all but a handful of 529 plans gladly accept contributions from people across the nation.
In some cases, it makes financial sense to use your state's 529 plan. Several states offer state income tax breaks to residents for making 529 plan contributions, and in most cases, those tax breaks are contingent on using the home state's 529 rather than another. However, a small number of states give deductions for contributions to any 529 plan.
Source: Fool.com