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The Truth About Protecting Your Family From Excessive Taxes: The Essential Truths in 20 Minutes by S. Kay Bell

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TRUTH 7Tax-favored college savings options

Congratulations on your new baby! Have you started saving for college yet?

It’s not too early. Children do grow up quickly, and higher education costs go up even faster. The good news is that you have several tax-advantaged ways to come up with college cash.

529 plans—529 plans get their name from the Internal Revenue Code section under which they were created. These plans are the overwhelming favorite of families and financial planners alike. Your contributions to a 529 plan are not deductible on your federal return, but the money invested in the plan accumulates tax-free. Even better, when you withdraw account funds to pay for qualified education costs, those distributions are not taxed.

Another appealing ...

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