529 plan can help Las Vegas parents save for college tuition
LAS VEGAS (KLAS) — Parents in the Las Vegas valley who have children aiming for higher education may potentially look at investing in a 529 plan.
A 529 plan is an investment vehicle designed to help families save for future education costs. They offer the potential for higher returns and tax-advantaged growth.
When one withdraws money for qualifying higher education expenses such as tuition and fees, room and board, or school supplies, they will not have to pay taxes on those items saving money in the long run.
“If you had that in a mutual fund or some other type of investment, you would have to pay taxes on those earnings,” Martha Kortiak Mert, COO of Saving for College said. “So now if you’ve saved $50,000 or more, that would actually get to be a lot – several thousand dollars in taxes that you’re paying as you’re making withdrawals overtime, that’s not going directly to your child’s college education.”
There is no set amount one has to deposit into their 529 plan, but the rule of thumb is to save early and often. Kortiak Mert recommends using the one-third rule: estimate the future cost of college and aim to save one-third of that.
“We suggest people start as early as possible because you have a limited amount of time to save for college,” Kortiak Mert said. “Unlike retirement where you have decades, at most you’re going to have 18 years, maybe a little bit more if you start before a baby is born, so we suggest starting early.”
529 plans are not limited just to universities funds they can also be used for technical and trade schools, K-12 tuition, and apprenticeship programs.
If a child chooses not to go to college, the funds can also be transferred to a beneficiary plan, Roth IRA, or saved for a grandchild.
To find the recommended monthly contribution for a 529 plan a free calculator is found on their website.
Copyright 2024 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
For the latest news, weather, sports, and streaming video, head to KLAS.