When you’re blessed with grandchildren, all the joys of having little ones come flooding back to you—the precious moments, the new discoveries, the unforgettable firsts, and everything in between.
But just as it was with your own children, you have to help plan for their futures. And that starts as soon as they’re born.
There are lots of benefits to enrolling in a 529 plan with CollegeCounts for each of your grandchildren, and it’s never too early to start contributing! Here are a few things to consider.
Easy to Manage
A 529 plan is extremely beneficial when it comes to saving money, but it’s simple to maintain.
You can make regular monthly contributions easily via direct deposit or automatic investment plans, and you can choose an age-based option where your contribution grows along with your grandchild. And since 529 contributions are tax deferred, your contributions don’t have to be reported on your grandchild’s income tax return.
Your contributions to a 529 plan can be used at nearly any institution of post-secondary education—that includes public schools, private schools, foreign schools, vocational programs, even online programs.
And if your grandchild decides not to pursue a college education, that’s not a problem. You can change the beneficiary of your plan to another grandchild (or anyone else planning to attend college) without affecting your taxes.
Greater Growth Potential
Sure, the simplest way to save for your grandchildren is to drop coins and small bills into a jar. But then you’d be missing out on greater earnings through a 529 plan.
Unlike mutual funds and similar investments that lose a large portion to income taxes, your 529 plan will grow without the burden of federal taxes. Additionally, your plan will be exempt from gift taxes as well as the “kiddie tax.”
If you’re worried about options for withdrawal when your grandchildren are ready for the funds, you can rest easy knowing that withdrawals for qualified educational expenses are free from federal tax.
And “educational expenses” include more than just tuition; textbooks, school supplies, room and board, computers and software, internet expenses, and more are all eligible.
Alabama’s 529 Fund allows you to contribute extra cash to your savings plans when you make everyday purchases, thanks to our CollegeCounts 529 Rewards Visa Card.
With this card, you’ll earn 1.529% (easy to remember, right?) on everyday purchases, and as soon as your cash back reaches $50 or more, the funds will automatically be transferred to your 529 plan. That’s hundreds of dollars that you can add to your already scheduled contributions, which can make a huge difference when it’s time for that first fall semester.
Want to learn more about the benefits of opening a CollegeCounts 529 fund for your grandchildren? We’ve got lots of resources to help you make the best decision for your grandkids’ future.