College Savings Plans – are they best choice for my child?

College Savings Plans, also called Section 529 plans, are one of best ways to save for college because they offer:

-Tax advantages -A variety of investment options -Flexible contribution options -Parental control -Little impact on eligibility for need-based financial aid

Tax advantages

Investments in 529 plans are usually exempt from federal taxes. Earnings are tax-deferred and are not subject to capital gains taxes. Redemptions are also exempt from federal income tax if they are used to pay for tuition, room and board, fees, books, supplies, or equipment.

Most states also offer tax advantages, at least if you enroll in plan for your own state. In addition, contributions may be deductible on your state income tax.

In addition to these income tax benefits, College Savings plans can be a valuable estate planning tool. The accelerated gift option allows you to average gifts over $11,000 per beneficiary over a five year period with no federal gift tax. This means you can contribute up to $55,000 per beneficiary in one year with no gift tax. Contributions are immediately removed from donor’s gross taxable estate (and included in estate of beneficiary). Investment options Most states offer three or more investment options ranging from conservative to aggressive. One is usually an age-based portfolio that invests mainly in stocks while a child is young, then shifts to bonds and money-market funds as college years come closer. 529 plans are managed by experienced investment companies, such as Vanguard, Fidelity, and TIAA-CREF. Contribution options Anyone can contribute money on behalf of a beneficiary, allowing friends and relatives to give gift of education. In addition, minimum investment amount required to open an account is usually lower than mutual funds require, making section 529 plans affordable for lower income families.

States set their own contribution limits for college savings plans. Most states base their limit on an estimate of amount of money needed for seven years of post-secondary education. Limits range from $146,000 to $305,000.

The first step is self-control. If you can’t discipline yourself to make wise decisions about credit card use, then don’t get a credit card. You’re just asking for trouble. This means that you have to be brutally honest with yourself. If you’re not judicious with money in your bank account, how can you be judicious when it comes to use of someone else’s money, which you’ll have to pay back with interest? Don’t fool yourself. Be honest and be willing to make decision not to get a credit card if you feel that you won’t be able to control it.

That being said, there is a difference between thinking you can handle a credit card and actually handling one properly. It can be like a loaded weapon if you’re not careful. But, if you’re wise, it can be a valuable tool that can reward you for proper use. Here are a few tips for getting most out of credit cards: