Going to college is a major necessity in order to have professional success in many different fields. While going to college is very important, it is also rapidly increasing in costs. While the cost of four years at public colleges is rapidly approaching $100,000, and private education can cost double that amount, the ability to pay is reducing. To ensure that their kids are not left iwth a lot of student loan debt after college, many parents are choosing to find ways to save for their child’s education. A recent news story was released to provide tips on how to save for college costs (http://money.cnn.com/2017/06/08/pf/college/save-for-college-529-roth-ira/index.html).
The article pointed out that one of the main accounts to take advantage of when you are trying to save for college is a 529 account. A 529 account is a tax-advantaged savings account that can help you build a nest egg. The main advantage of a 529 is that your investments can grow without tax penalty. Furthermore, many states provide savers with a state tax deduction. However, if you were to withdraw your funds from the account for anything other than education costs, you could be hit with a major penalty.
Since the 529 accounts are not very flexible in terms of taking money out, it would be wise to consider other options as well. One of the other options to consider is investing in a Roth IRA. A Roth IRA is designed to be used as a retirement account, but could technically be used to invest in education costs as well. Roth IRA contributions are tax deductible on federal taxes in some situations, which can provide you with an immediate positive return on your investment. Furthermore, there are many more ways to withdraw your funds, including education costs, without suffering a financial penalty.