With tuition costs on the rise, employees looking for ways to pay for their children’s college education can save with 529 plans, a tax-advantaged savings plan that encourages parents or guardians to save for a child’s college education. Phil Chandler, a financial adviser for Edward Jones, says the tax-free gains feature is the primary driving force behind the popularity of 529s. Previous products did not allow this aspect to be used for higher education.
Many plan sponsors are offering this through the workplace so participants can build up their 529 plan through payroll deduction or direct deposit via the investment adviser of their choice. There are two types of 529 plans: prepaid tuition and college savings. In the U.S., all 50 states offer at least one type of 529 plan, according to the Securities and Exchange Commission.
