Anyone with kids who has not opened a Section 529 College Savings Plan take note. A 529 plan allows anyone age 18 or older to open a savings account for future college costs (such as tuition, books, room and board, supplies, etc.). The California ScholarShare plan (www.ScholarShare.com) allows California residents to save for college and any earnings are TAX FREE as long as withdrawals are used for college costs.
There are a number of other nice features about these plans:
- If your child doesn't attend college, you can use the funds for another child or even use them for yourself. Or grandkids, siblings, nieces, nephews, (fill-in-the-blank)-in-laws and spouses of any of these individuals.
- Funds can be used at any 2 or 4 year college, university or vocational school.
- There's a very low $50 minimum initial investment and no annual account fees.
- Fidelity has 10 different investment options, including several "age-based" plans that automatically invest more conservatively as your child nears college age.
- If you are leery of the stock market, there are conservative investment options like money market and treasury bond funds.
- You as the account holder control the account, not your kid!
These plans are pretty much a no brainer if you know someone in your family will be attending college and you will be paying for it. Sign up now to start saving for college while cutting your taxes!