WHEN YOUR BABY’S IN THE CRIB, it can seem like you’ve got plenty of time to save for her education—but the tuition bills will come soon enough. How can you prepare? Though by no means the only way to save, 529 plans have been a popular way to sock away funds for college. And now, as a result of 2017’s tax law, they can also be used to cover elementary and high school tuition, including for private and religious schools.
529 accounts can be opened by anybody, for anyone, with no income limitations. You can also change the beneficiary without penalty or cost if, say, one child doesn't need the money. But their main benefit is their tax advantage, says Richard Polimeni, director of Educational Service Programs at Bank of America Merrill Lynch. “Your assets grow tax-deferred while they’re in the account, and as long as they are used to pay for qualified expenses, they come out completely tax-free when you withdraw them.”
In these two videos, Polimeni and Stacy Allred, head of the Center for Family Wealth, Merrill Lynch Wealth Management, discuss how to choose the plan that’s right for you, and what you can do to start saving today.
Choosing a 529—Which Plan Is Right for You?
529 plans are offered by 49 states and the District of Columbia—all with different features and rules. Richard Polimeni, director of Educational Service Programs at Bank of America Merrill Lynch, offers his insights and talks about finding the plan best suited to your needs and goals.
Funding Your Account: Try These Tips and Start Saving for College Today
Once you’ve chosen a 529 plan, it’s time to begin making regular deposits. Stacy Allred, head of the Center for Family Wealth, Merrill Lynch Wealth Management, suggests ways to make education savings part of your financial routine.
Transcript of Video
3 Questions to Ask Your Advisor
- With so many different 529 plans available, how can I decide which one is best suited to my family's needs?
- How much should I realistically be putting into a 529?
- What other strategies can I use to prepare for education costs?