Personal Finance

How can I save enough for college?

If you’re worried about saving for your child’s college education, start a 529 education saving plan.

Unlike other savings options, all 529 plans, such as Learning Quest in Kansas and MOST in Missouri, provide the same federal tax benefits of tax-deferred growth and tax-free withdrawal for qualified education expenses.

Most, but not all, states offer a state tax benefit, and some states provide for state tax parity where contributions to any state plans are recognized for the tax benefits that the state may offer. Kansas and Missouri both offer state tax parity.

Each state also chooses the investment managers and the type of investment options. It is important to check with the state plan to see how long the current investment-provider contract has left before they consider a money manager change. New managers may not be your first choice.

Since the Internal Revenue Service permits only one change in investment options for a beneficiary per year, research a 529 plan that offers a good age-based option. The age-based option is invested based on the age of the beneficiary.

Younger beneficiaries are invested in more aggressive portfolios than the more conservative choices for those closer to starting college.

For families that may not be able to adequately fund their children’s 529 plans, check out savingsforcollege.org and Gradsave.com, an online college savings registry that helps parents, family and friends contribute to your child’s 529 plan in lieu of traditional gifts.

With today’s rising cost of a four-year college education, it’s never too soon to talk with a financial adviser about starting a 529 college saving plan. Take advantage of a 529 plan, but do your research first.

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