A major financial concern of many associates at law firms who have recently started a family is the funding of college education costs for their children. With the average yearly cost of a four-year private institution exceeding $24,000, parents will be pleased with the federal government’s new incentives to save on taxes while saving for college tuition. The incentives are in coordination with state programs that allow federal and state taxes on the earnings on the contributions to a college tuition savings account to be tax-free if used for qualified education expenses.
Should you be setting up one of these accounts for your children (or even yourself or spouse if contemplating further education)? The answer is based upon your specific wants and needs, as well as your overall sophistication with choosing investment products. The following sets forth some advantages and disadvantages to consider when deciding to set up a college tuition savings account, or “529 plan” as the or commonly referred to.
