An overview of 529 College Savings Plan

We all have heard about 401(k) savings plan for retirement. Here I am going to tell you about another interesting plan; a 529 savings plan for college. You don't have to go to your employer to implement this plan, you can do it yourself. This savings plan is sponsored by state and it is going to help you save in a tax-free way for tuition in any college or university in the country. One thing I need to mention to you or beware you "please don't utilize these funds for non-college-related purposes, or else you need to pay penalties and owe taxes".

You can also gain a tax advantage of 529 plan, you don't have to pay any amount of tax for withdrawals done for college tuition and other college related expenses. You should start thinking about this college savings plan since your kids were in nursery. I am suggesting you to do so because we all know, the longer your duration of doing any savings, the more amounts you will be able to save.
In this 529 plan, any one may contribute to the child's section of 529 plan. It can be relatives, friends or colleagues, and even it can be strangers. But, in the 529 College Savings Plans there are some constraints for making contributions. In this plan, contributions are treated as gifts for federal tax purposes. An individual may contribute up to $11,000 annually, or married couples' contribution can be $22,000 who files join tax returns (they should keep a note that it shoul not exceed the federal gift tax exclusion). There is an option for clients who can also contribute till $55,000 per beneficiary. Anyone may contribute, income or state residency is not taken into consideration.
At last, a person who makes contribution to a 529 College Savings Plan will also be able to contribute to a Coverdell Education Savings Account in the same year.