SPOKANE, Wash. — Getting ready for college may feel like a huge financial burden, but parents can start preparing as soon as their child is born.
Parents can open a 529 education savings plan once their child receives a Social Security number. Money in these accounts grows tax-free and covers tuition, books, supplies and K-12 private school costs.
“It’s not something that shows up on a baby registry, and when you have a new kiddo there are so many expenses so thinking about setting aside some money for that is stressful,” said Jon Maroni, financial engagement manager with Numerica Credit Union.
“The power of these accounts is that they can have a lot of time to grow,” Maroni said.
Parents don’t have to open a 529 plan in their home state, so Washington residents may want to shop around. However, Idaho residents receive state income tax deductions by choosing Idaho’s 529 plan.
The plans offer flexibility if circumstances change. Parents can transfer unused funds to other family members or roll money into a Roth IRA for their child’s retirement.
“I have one daughter if she doesn’t need those funds and then we roll over some to her Roth IRA to start her retirement, but there’s still money leftover, I could make the beneficiary myself, I could make it one of my nieces, so there’s a lot of flexibility with them,” Maroni said.
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