Latest news with #529Plan
Yahoo
6 days ago
- Business
- Yahoo
Vincent Chan Unveils How You Can Make Your Children Rich: 'It's A Lot Easier Than You Think'
Many parents want to set their children up for more financial success than what they had growing up. It's a noble goal that may sound challenging, but financial TikToker Vincent Chan recently revealed a simple roadmap for making your children rich. "It's a lot easier than you think," he explained. You've heard of investing, traditional retirement accounts, and Roth IRAs, but Chan is talking about a different account that most people are underutilizing. Here's how you can make your children rich. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Maximize saving for your retirement and cut down on taxes: . A 529 Plan is one of the best tax-advantaged accounts for building wealth. This account does not have a maximum contribution limit, and the money grows tax-free. If you're single, you can give up to $19,000 per year for each child. However, if you are married, you can give each child up to $38,000 per year without having those contributions count toward your lifetime gift tax exemption. You can only use 529 plan funds for educational expenses like college and school supplies. Paying for your child's education will give them a tremendous head start, but that's not the only benefit of this account. You don't even have to wait until you have children to create one of these accounts. Individuals can create 529 plans for themselves and list their children as beneficiaries later. You can save for your child's financial future before you even get married. Trending: Invest where it hurts — and help millions heal:. You don't have to make flashy financial moves to make your children rich. Chan recommends investing the money and watching it grow instead of trying to time the stock market or use options. Most investors just have to find a good ETF that tracks a popular benchmark like the S&P 500 or Nasdaq Composite. These ETFs are already diversified, and you can find ETFs that align with your long-term financial goals. Your children won't be able to access the money for a while, so it's usually a good idea to take a growth-oriented approach with these accounts. They have plenty of time to ride market volatility and corrections before they can access the money.A 529 savings plan is a great resource to cultivate generational wealth, but you still have to practice good money habits to make annual contributions. Chan regularly teaches people how to establish good money habits, but it rarely involves doing anything out of the ordinary. Chances are you know about most of the good money habits. Creating a budget, knowing your expenses, picking up a side hustle, investing your money, and pursuing career opportunities that boost your income are some of the top money habits. Building wealth for your children now can give you more motivation to stick with long-term financial goals and develop discipline. It's easier to act upon goals when you have a purpose that is bigger than yourself, and most people discover something bigger than themselves when they become parents. Read Next: Here's what Americans think you need to be considered wealthy. Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Vincent Chan Unveils How You Can Make Your Children Rich: 'It's A Lot Easier Than You Think' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
10-05-2025
- Business
- Forbes
Here Are 6 College Savings Account Types You Should Know
College savings jar full of coins getty Funding college education is one of the most important financial goals you can have. While reports differ as to whether costs are rising or falling in recent years, college tuition is still a significant expense, even with financial aid and scholarships. Whether you are a parent, guardian, or student, understanding and comparing different savings options can help you plan better. This article explores six common college savings accounts in the United States. Named after Section 529 of the Internal Revenue Code, these plans are sponsored by states, state agencies, or educational institutions. A 529 plan is an investment account that features tax advantages and potentially other incentives that make it easier to save for college or other educational expenses. Most 529 plans have access to a range of investment portfolios, including age-based options that automatically adjust risk as the beneficiary approaches college age. While states offer different perks and benefits for contributing to 529 plans, a common feature is that your earnings grow tax-free at the federal level. Withdrawals used for qualified education expenses, such as tuition, room and board, books, and other mandatory expenses, are also tax-free. There is no federal contribution limit for 529 college savings plans, but each state sets their own, ranging from $235,000 to more than $500,000 per beneficiary. For example, you can contribute up to $529,000 in California, $350,000 in Kentucky, and $269,000 in North Dakota. Incidentally, Wyoming is the only state that does not offer a 529 plan. Funds can be also transferred between beneficiaries if one child doesn't use all the money. The Tax Cuts and Jobs Act of 2017 has also expanded the use of 529 funds to include up to $10,000 per year for K–12 tuition and a lifetime limit of $10,000 for student loan repayment. As such, 529 plans are ideal if you are seeking a long-term, tax-efficient vehicle for college savings. Their high contribution limits and broad eligibility make them accessible to most households. This is another type of 529 plan administered by state governments. It allows you to purchase future college tuition at current prices, helping you lock in costs and better plan your finances. Unlike 529 college savings, prepaid tuition plans are considered conservative since they do not typically have an investment component. Nonetheless, they are reliable vehicles that can shield you from rising college costs. You must note that prepaid plans cover only tuition and mandatory fees, not room and board or other expenses. They are also limited to public in-state colleges and universities, meaning if a beneficiary chooses to attend a private or out-of-state institution, the plan may pay only a portion of the tuition equivalent, which could significantly reduce its value. Lastly, many prepaid plans have residency requirements. Hence, these plans are best suited if you are confident you or your child will attend an in-state public institution. This is a special savings account that can be used for both K–12 and higher education expenses. These accounts are not state-sponsored but are instead established through financial institutions. A Coverdell ESA allows tax-free growth and tax-free withdrawals for education expenses. However, unlike 529 plans, the range of qualified expenses is broader and includes other items like tutoring, school supplies, and uniforms. A major drawback of the ESA is its relatively low annual contribution limit, just up to $2,000 per beneficiary. There are also income limits for contributors, adjusted periodically. This year, eligibility phases out for modified adjusted gross incomes between $95,000 and $110,000 for single filers, and $190,000 to $220,000 for joint filers. The funds must also be used by the time a beneficiary turns 30. If not, the remaining balance must be transferred to another eligible family member or will face taxes and penalties. Coverdell ESAs are ideal if you want to be able to use the funds for a wide range of education expenses, especially during your child's K–12 years. Custodial accounts, established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA), allow adults to transfer assets to a minor without establishing a trust. These accounts are not specifically designed for education but can be used for any purpose that benefits a child. These accounts do not offer the same tax advantages as 529 or Coverdell accounts. A portion of the earnings is subject to the kiddie tax, where the unearned income may be taxed at a parent's marginal rate. Importantly, the assets in a custodial account become the child's legal property when they reach the age of majority (18 or 21, depending on the state). Custodial accounts are best suited for families who want to make financial gifts to a child without restricting its use solely for education. They are also useful when larger gifts are planned that exceed annual gift tax exclusions. A Roth IRA is typically a retirement savings vehicle, but it can also be used for education expenses. Contributions to a Roth IRA are made with after-tax dollars, and earnings grow tax-free, like 529 savings plans and Coverdell accounts. While early withdrawals of earnings usually incur penalties, Roth IRAs allow for penalty-free (but not necessarily tax-free) withdrawals if used for qualified higher education expenses. Your contributions can always be withdrawn tax- and penalty-free. The annual contribution limit for Roth IRAs in 2025 is $7,000, with an additional $1,000 catch-up contribution for those age 50 or older. Eligibility phases out between $146,000 and $161,000 for single filers and $230,000 to $240,000 for married couples filing jointly. Remember that using a Roth IRA for education depletes your retirement savings so you must weigh the opportunity cost of sacrificing long-term growth for near-term expenses. Roth IRAs work well for families seeking a multi-purpose account with flexibility. Of course, you can also use a traditional savings account. You can open a separate savings account in a bank or credit union, and earmark it for future educational expenses. They are accessible and easy to open, have no age restrictions, and are FDIC-insured up to $250,000. However, interest rates on these accounts are relatively lower, compared to the other options, so your savings may not earn enough to keep pace with inflation. They also do not offer tax benefits for education expenses, which means your earnings may be subject to federal or state taxes. You can use traditional savings accounts as a supplement to your other college savings. You may also use it as a kind of college emergency fund. Before you choose which college savings account to use, consider your household income, target educational institution, future financial aid eligibility, tax implications, and your long-term goals. You may also layer strategies to maximize flexibility and tax efficiency. As each family situation is unique, consider seeking professional advice. These experts can provide you with tailored guidance based on your specific needs and circumstances.
Yahoo
01-05-2025
- Business
- Yahoo
Open a new CollegeBound Saver account in May and get $250
The office of Rhode Island General Treasurer James Diossa is giving out $250 to the first 160 families who sign up during May 2025 for the state's 529 Plan. (Getty Images Plus) The first 160 Rhode Island families to open a CollegeBound Saver account for a child up to 5 years old during the month of May using a promo code are eligible to receive $250 to jumpstart their education savings. The offer was announced by the office of Rhode Island General Treasurer James Diossa Thursday in partnership with the Rhode Island Association for the Education of Young Children. 'When we talk about giving kids the best start, it's not just about those first steps — it's about building a future full of opportunity and support,' Diossa said in a statement. An account must be opened on the CollegeBound Saver website with the promo code 529Day to receive the promotion. An account takes about 10 minutes to set up, according to the website. CollegeBound Saver is Rhode Island's iteration of a 529 plan, which is intended to boost families' savings for future education costs for children or other beneficiaries. Rhode Island plan assets grow tax-deferred and withdrawals are tax free when used for higher education costs. Savings can be put toward expenses at any accredited university or college in the U.S. or abroad. They can also be used for trade and vocational schools and registered apprenticeship programs. Last year, Diossa's office participated in 529 Day, the national celebration of 529 plans, and deposited $300 contributions into new CollegeBound Saver accounts through a partnership with the Rhode Island Foundation and the Office of the Postsecondary Commissioner. That promotion lasted for 24 hours and kids ages 3 through 7 were eligible. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
