The cost of a college education is higher year after year, with no relief to increases in sight. The annual cost at an Ivy League school is over $60,000 a year; even state schools for in‑state students is over $20,000 in some locations. How can you manage to pay all or even some of the cost for yourself, your spouse, or your child? It isn’t easy, but tax incentives can help. Here are some tax‑advantaged strategies for education savings.
529 Plans
There are two types of state plans that can be used to save for higher education:
Tuition plan. Contributions pay a fixed amount of state school tuition (depending on the amount of contributions and the projected tuition).
Savings plan. Contributions are invested and available to pay qualified expenses on a tax‑free basis.
There are no income limits on contributors. The amount you add to the plan is up to you. However, states impose account limits, so no contributions can be made when the value of the account reaches a set limit (e.g., $350,000 per beneficiary in California’s plan; $375,000 in New York’s plan; $394,000 in Florida’s plan). Read More
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