May 29th (5/29) is National 529 College Savings Plan Day!
A growing concern for many parents is the future cost of their child’s education, second only to retirement. With the sky rocketing cost of college tuition, parents often struggle to figure out how they are going to pay for it when the time comes. In a 2017 study by Sallie Mae, 86% of families anticipate that their children will go to college, but only 39% of families make a plan on how to pay for this expense. 
The Benefits of a 529 College Savings Plan
While the cost of college will vary depending on the school the child decides to attend, making a plan early can put parents on the best path to achieve their funding objectives. A 529 College Savings plan is a state-sponsored investment vehicle that enables parents and other family members to save for college. The following are some of the benefits of utilizing a 529 Plan:
1. Earnings in the plan grow tax-deferred.
2. Withdrawals are tax-free when used for qualified education expenses at most accredited two- and four-year colleges and universities, U.S. vocational-technical schools, and eligible foreign institutions.
3. An individual tax payer can contribute $15,000 per year or a lump sum contribution of $75,000 to cover 5 years ($150,000 for joint tax payers) to a 529 Plan for an individual beneficiary, without being subject to gift taxes. A beneficiary can receive contributions from an unlimited number of people. (Note: There is a lifetime limit on contributions for an individual beneficiary that varies by state, but typically the average lifetime limit is about $380,000. )
4. No age limit on contributions — beneficiaries can continue to receive contributions regardless of their age.
5. No requirements for funds to be distributed - 529 Plan savings can continue to grow tax-deferred, indefinitely.
6. The beneficiary of a 529 Plan can be changed once per calendar year, which allows for sharing surplus savings across multiple related family members (for example: siblings, first cousins, aunts, uncles, parents or grandparents).
7. Investment options are governed by the state sponsoring the plan and most include “Age-based” strategies that automatically reduce the risk of the child’s 529 Plan investments as they near college age.
8. A 529 Plan can be opened in any state, regardless of your state of residency.
" 50% of parents do not know how much their child’s future education will cost and how much they need to save before they enter college. "
The Key is to Start Saving as Soon as Possible
In a recent survey, 50% of parents said they do not know how much their child’s future education might cost or how much they need to save before they enter college.  This is why it’s important to plan early, when a child is young. By beginning to save early, you can benefit from the time value of money allowing investments to grow, and thus, save smaller amounts along the way, rather than having to come up with a larger lump sum to cover expenses later.
Sometimes, the uncertainty of not knowing where students will attend college and therefore how much to save becomes a barrier to setting up a plan. Even though the end goal may change based on the child’s future educational ambitions, parents should still consider establishing a savings plan as soon as possible. Working with a qualified financial advisor to forecast the potential future cost of your college education can tell you how much you should save, and then provide a baseline for making adjustments to your plan in the future.
Special Note: 529 Plans and K-12 Expenses
Beginning in 2018, recent federal tax reform allows up to $10,000 each year to be withdrawn from a 529 Plan to cover a beneficiary’s qualified K-12 tuition expenses. This does not mean, however, that the distribution will not be subject to state taxes, as many states have not adopted the federal changes. Therefore, before making 529 withdrawals for K-12 education expenses, you should consult a qualified tax advisor to discuss the impact on your individual situation.
 Sallie Mae. How America Pays For College. 2017. https://www.salliemae.com/research/how-america-pays-for-college/
 Forbes. When It Comes To 529 Plans, Parents Just Don’t Understand. October 26, 2017. https://www.forbes.com/sites/katiepf/2017/10/26/when-it-comes-to-529-plans-parents-just-dont-understand/#72c2b0ab42de