The pursuit of a college education was once viewed as essential, or even desirable, by a fraction of Americans, In the 21st-century, however, college degrees are sought by the majority of high school graduates due to the importance of success in the knowledge economy. As the number of middle and upper-middle-class college students continues to rise, more and more of their parents must face this question: How can we fund a college education?
According to a study by T. Rowe Price, 66% of parents who don’t set aside money for their kids’ educational needs simply can’t afford to do so. (Some might just think that saving for college is unaffordable.) 16% of parents are waiting to save for college, and 12% of parents don’t even know how to begin. From our perspective, it’s never too early to begin investing for the future of your children, and, with Wealthbridge by your side, the entire process will be painless.
We believe that 529 college savings accounts offer the best benefits for most families looking to pay for degrees. In many ways, a 529 is like an IRA for your tot. According to CollegeCounts, the organization responsible for 529 accounts created through the State of Alabama, parents will enjoy many tax benefits with an Alabama 529.Benefits include:
· Attractive tax advantages including tax deferral on any growth in the account and tax-free withdrawals for qualified college expenses.
· Alabama taxpayers are eligible for a state income tax deduction up to:
· $5,000 single filers
· $10,000 married, filing jointly when both spouses contribute
A 529 account created in Alabama can be used to pay for educational expenditures outside of the state, too. In addition, the account will not become the child’s asset when he/she turns 18 or 21. Older college savings vehicles, such as Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts transferred to the beneficiary when he/she turned 18. Not will a student with significant assets likely sacrifice financial aid opportunities, he/she can spend money from an UGMA/UTMA at will beginning at age 18. A 529 account, meanwhile, will remain a parental asset. Due to the many benefits of 529s, it’s no wonder that use of the accounts is booming.
Surprisingly, though, a survey by Edward Jones indicates that millions of Americans don’t know anything about 529s!
Here at Wealthbridge, we manage with 529s on a daily basis. They’re our favorite education savings vehicle! We’ll work with you to maximize the plan’s tax advantages while also determining a suitable contribution schedule and investment allocation. (529s offer numerous fund options, and a diversified portfolio is essential to ultimate success.) You can rest assured that we’ll be by your side all the way to graduation day. We believe in the power of education and look forward to helping your family turn dreams into reality! Do we hear the sound of Pomp and Circumstance???