If you already have grandchildren or know your family will grow in the future, it makes sense to consider a 529 plan to help pay for their college education. 529 plans are set up before your grandkids even head out to college and allow you to put money aside for tuition so it will be there when they need it. There are several benefits to using this type of program with the most well-known being the possibility of locking in today’s tuition prices. With the ongoing increase in tuition, paying 2019 prices for a plan which might not be cashed in until 2032 makes good financial sense.
In addition, there are some attractive tax benefits available to those who take advantage of 529 plans when planning for their families’ futures. The money invested grows tax-deferred, and later college costs are free from federal taxes, while Ohio may offer some additional, considerable tax benefits. An experienced elder law attorney can help you navigate the tax benefits and determine exactly how a 529 plan can benefit both you and your family.
529 plans are typically run through states or institutions, which causes some concern for grandparents about whether or not kids growing up in Ohio have to attend specific schools in the state. Fortunately, most plans will allow students to choose from a variety of schools and do not limit them to one geographic area. It is actually fairly common for grandparents from one state to invest in a 529 plan on another state, either because of personal preferences or because that’s the state where their grandkids reside.
One thing to note is that there are two different types of 529 plans available for consideration when planning for your grandkids’ future. Savings plans are similar to retirement plans because your contributions are invested in things such as mutual funds. The value of this particular 529 plan depends on how these investments perform. Prepaid plans allow you to pay the tuition in advance and can usually be converted for use at out-of-state or private colleges.
If you have questions on setting up a 529 plan and whether it’s the best option available for your grandkids, or if you currently have a 529 plan and want to have it reviewed to see how it fits in with your current retirement plans, please contact our Ohio elder law office at 877-653-3450 to schedule a complimentary initial consultation.