529 California

The 529 plans are the qualified tuition programs which give a right opportunity to not only save funds for higher education of your children but also gives some tax advantages to you as well. These education plans are based on section 529 of the IRS.

Today every US state offers at least one of these plans. And any US citizen who has a Social Security identity or Tax Payer identity number can invest in these funds. In fact, this kind of investment goes beyond the state boundaries. Almost 33 US states offer their 529 plans to non-residents as well.

The State of California offers you the best of the 529 savings plans. Participating in the 529 plans in California is quite easy too. Anyone can invest in them, irrespective of their income or property holdings. To make things easier for the Californians, the mutual fund companies, banks and their brokerage subsidiaries, and some colleges have also been granted rights to provide these plans. All of these units have set up online directories so that persons willing to invest in such tax saving schemes can meet the fund advisors and plan managers, to learn more details about these 529 plans.

To get a 529 plan, you just have to meet the plan advisor or the savings planner and understand the various plans. After deciding on the plan, fill out the enrollment form and pay the premium. After that, the planner will manage your account, its premiums, and the tax returns and deductions for this plan.

Advantages of buying 529 plans in California:

a. The account's earnings are tax free. The amount you earn for interest return is not taxed.

b. The beneficiary of the account cannot misuse the money of the account holder. Only you, as an account holder, are entitled to utilize money for the beneficiary's education.

c. You are not bound by any income boundaries. Previously, your high income prevented you from opening an account and you couldn't save beyond a certain amount for such future education expenses. But, now you can save more than $200,000.

But, the 529 plans have some disadvantages as well. There are some hidden charges and maintenance fees associated with it. For example, you invest $600 per annum @ 8 %. So, the amount should have been $648 at the end of the year. But the maintenance charge of $50 dollars will also be deducted annually. Ultimately, you are left with $598, and actually lose $2 on the original amount, instead of gaining $48.

So, before you invest in such a plan take care that you read all the terms and conditions and invest in the best plan where you can get the maximum benefits.

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