To begin with, a 529 plan is an investment plan that encourages savings for future higher education expenses. All withdrawals for qualified educational purposes are tax-free. There are two types of 529 plans. The first one is a prepaid tuition plan. This plan allows to pre-purchase tuition that is based on today’s rates and to pay it out at the future cost when the beneficiary goes to college. Another type is a savings plan and it is a little bit different. The account earnings you own are based on the market performance of the underlying investments. They typically consist of mutual funds.
There has always been a heated debate about the plan that is more beneficial for a future student. Yet, everyone seems to agree that savings plans are less of an empty promise. What it means is that prepaid tuition plans turn out to be quite risky. Anyway, the decision is tough which is why one should allocate a lot of time before choosing the plan or signing any papers. There is a lot to consider in this respect. If you want to learn more about college tuition planning and how it works, do not hesitate to go to …