Consider front-loading your 529 plan
General Newsletter: Do One Thing
Consider front-loading your 529 plan
Sept. 17, 2024
When should you start saving for your child’s college education? There’s some good reasons to consider starting earlier and with bigger contributions:
Maximizing the tax benefit: Your initial contribution to a 529 offers no federal tax benefits (though some states have benefits for contributions.) The federal tax benefits all sit at the time when you withdraw your funds for education expenses: you won’t owe taxes on investment gains. To maximize the tax benefit, you want to maximize the investment gains. How?
Allowing extra time for compounding growth: Many people first begin investing for retirement, with 40 - 50 years before they’ll need to access those funds. By contrast, you only have 18 years at most to invest for a child’s education. Extra time in the market allows for extra time for compounding — earning gains on your gains.
Of course, this strategy may or may not be best for your circumstances. Speak with a financial advisor or consider attending our webinar, “Five Financial Moves for Parents.”
Educational illustration to demonstrate time value of money. Assumes 8.5% annual returns with monthly compounding. Not intended to promise or project returns for any specific product.
Author: Caitlyn Driehorst
Date Published: 9/17/2024
Want to know more about 529s?
Look out for our Five Financial Moves for Parents Webinar.
“You've achieved a lot of Maslow's Pyramid for your kiddos: Housed, check. Eating, check. Sleeping -- well, mostly check.
But what are the money moves you need to make sure that you're taking care of their financial needs and your financial needs, and protecting the new layers of risk that exist in your life? Join us for a lively discussion of five important money moves to make when your children are young, including:
* Saving for college and saving for retirement, at the same time
* Updating your insurance (and not get scammed in the process)
* Preparing the documents that would protect your family if something happened to you (or both of you)
Whether you'd rather step on loose Lego than think about your retirement accounts or whether that piggy bank in "Toy Story" has nothing on you, we welcome you to join us for our 30 minute presentation followed by open Q&A. We also warmly welcome attendees who don't have children today but are gathering information for future decisions.”
Advisory services are offered through RightWise Wealth, Inc., an Investment Advisor in the State of Nevada. Being registered as an investment adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Nevada or where otherwise legally permitted.
