529 Plans Still Tops for Saving Success

Physician's Money Digest, January 2007, Volume 14, Issue 1

US News & World

Report

Parents never stop worrying about savingenough for their child's education—and the price never stops growing. With allthe options available for saving for college,it becomes difficult to discern which wouldbe the best vehicle for your saving needs.A recent article in helps parent-investors understandthe benefits of starting to save early andhow to start saving. Their recommendedsolution is a 529 account. These are statesponsoredinvestment accounts for education—the perfect jumping-off point forparents to begin saving. The account is anattractive option because the moneygrows and compounds tax-free, like your401(k). Furthermore, tax-free withdrawalof these funds for tuition, fees, and roomand board is now a permanent feature of529 plans thanks to the Pension ProtectionAct, signed in August 2006. Anotherattractive feature of this type of account isthat the money is not considered part ofthe student's assets when calculating aidentitlement.