Think College , a U.S. Dept. of Education site, is another wonderful source of information. Full of tips for parents and links to other useful websites, it's great for those hoping to send a student to college in 18 years or in just a few months. Check the calendars on the site of the National Association for College Admission Counseling for useful tips. The program pools the money and makes long-range investments so that the earnings meet or exceed college tuition increases in the state. Savings plans allow participants to save money in a special college savings account on behalf of a designated beneficiary's qualified higher education expenses.
Contributions can vary, depending on the individual savings goals.
Savings plans offer a variable rate of return and are not backed by the state or guaranteed in any way. This allows earnings to be federally tax deferred until the beneficiary enters college, and earnings are then taxable at the beneficiary's typically lower tax rate rather than the contributor's. Earnings are exempt from state income tax. With the 2001 tax act , the savings offered by 529 plans became more significant. Beginning in 2002 and lasting through 2010, money taken out of a 529 plan and used for educational purposes will be tax-free .