All About 529 Plans

BOSTON (CBS) - College is expensive. And many wonder if it is worth the cost.

I believe it is! Study after study has shown that for the most part college graduates do better. But you need a marketable degree.

Saving for college should start when your little one is still in diapers! However, it is never too late to begin at any age.

A good place to start to save is with a 529 Plan. College savings plans can now be set up so that the money is invested in mutual funds and grows tax deferred.

Massachusetts offers two options; the U.Plan and the U.Fund. Both plans are managed by the Massachusetts Educational Financing Authority (MEFA).

The U.Plan enables families to lock in future tuition and mandatory fees at today's rates at 80 participating Massachusetts schools.

The U. Fund is a 529 plan offering investments in mutual funds. Fidelity Investments is the provider for the Massachusetts U.Fund Plan.

The 529 dollars can be used to pay for not only tuition and fees but other qualified education expenses as well, including room and board, supplies and equipment including that new computer the school requires.

The advantages of the 529:

• No income limit restrictions when contributing to the plan
• Tax free withdrawals; no Federal or Massachusetts income tax due on distributions
• $50 minimum to open an account, you can set up an automatic investment plan for as little as $15
• Funds can be used at any accredited college nationwide
• The account is not in the student's name, presently it is considered an asset of the custodian, usually the parent or grandparent
• Can be used for other family members
• You make the portfolio choices
• Low-cost investment options
• High contribution limits ($375,000)
• Annul Gifting limits are now $14,000, a donor can gift $70,000 in one year and it will be considered an accelerated gift for 5 years. Their spouse can join in for $140,000.

A good place to learn more; The Saving for College website.

One more thing: For the record, I opened a Massachusetts 529 plan managed by Fidelity for my granddaughter two days after she was born.

In:
• Anthony Silva