529 California

The first plan for saving for future education was passed in 1996 by congress, through which parents or couples could fund or save a part of their incomes for the education of their offspring. This magnificent plan has been amended twice, the last time in 2002, when it was made even more flexible. It's been called the 529 plan or 529 college savings plan since it was incorporated into Section 529 of the IRC (Internal Revenue Code). This plan is followed by almost every state in the US, because it has been given the flexibility to defer taxes on the funds. The plan, besides supporting the education of the children, also includes tax relief on the earnings in the savings account.

California sponsors this 529 college savings plan. Under this plan, all Californians can save or invest a portion of their incomes for the future education of their children or any beneficiary they want to help, since this college savings plan is open, and anybody can contribute to it.

Where do I get the plans? In California, most of these plans are invested in through the Fidelity Mutual Fund Company. They have two plans for savings; an aged based category and a custom category, both with different plans and features. You can choose the one that suits you best. To learn all about these plans, you have to contact a plan manager/planner from the company and he or she will assist you in understanding the entire 529 savings plan.

Besides this company, some colleges and universities have also been given the authority to carry such individual plans. They carry the plans as per their own specific rules and regulations, but the basic concept and laws attributed to the plan are always the same. You can contact the respective campus for all the particulars. These plans help you meet the future needs and heavy expenses of a quality education for your children. Qualified expenses drawn from the savings account will include tuition, expenses of boarding, lodging, books and other educational expenses like examination fees and supplies.

The 529 college savings plan is basically categorized into two plans. One is called the Prepaid Plan: it's flexible and can be transferred from state to private colleges or universities, or from one state to another state. However, if the savings are transferred out of the state of origin, all of the benefits may not necessarily be transferable, and would therefore be lost. This is because it will totally depend on the state or the school's policies to which the funds are being transferred.

The second plan is called the Savings Plan: the funds of which are to be exclusively used for tuition and expenses through accredited schools, colleges, universities and some foreign universities.

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