College tuitions continue to soar resulting in college debt levels topping over $1 trillion in America. And as grandparents watch a generation of graduates – their own grandchildren among them – crippled with debt and struggling to start their lives, they are trying to pitch in to help lessen that burden. Their commitment to family and their financial ability to help out is translating into increased levels of assistance in hopes of paving the way toward a better future for their grandchildren. A survey sponsored by Legg Mason and its Scholars Choice 529 Plan, in partnership with GRAND Magazine, found that 47% of those grandparents who are contributing are doing so because they have the financial means to help their family.
Unfortunately, among those grandparents who do not contribute, there is a common belief that their small contribution can’t make a dent in their grandchildren’s big tuition obligations. But contributing at any level early in a grandchild’s life can help make a substantial impact – especially when they contribute to 529 Plans.
A 529 Plan can be started with a very small initial investment. For example, with the Scholars Choice College Savings Plan you can open an account with as little as $250 with subsequent contributions at a minimum of $50. That makes it easy to add to the Plan each year for birthdays and holidays. Couple your growing contributions with the federal tax advantages, great plan performance and low sales charge and fees and expenses, , and it all adds up to a meaningful contribution by the time your grandchildren hit college age.
To date, 27 States and the District of Columbia offer 529 Plans with state tax deductions. For residents contributing to their home state or district plan, it is important to compare those with other Plans – particularly if the maximum contribution level eligible for tax benefits is low. Scholars Choice believes it is important for you and your Advisor to do your homework and compare a range of factors that should go into your decision making process. These factors include performance, fees and expenses, investment options and yes, tax benefits. You need to determine what combination is right for you. We make it easy by offering a state-by-state comparison tool: https://scholarschoice.myleggmason.com/portal/server.pt?open=514&objID=55297&parentname=CommunityPage&parentid=2&mode=2&in_hi_userid=383474&cached=true
It is also important to note that your investment in the 529 Plan grows tax-deferred and distributions to qualified college expenses come out federally tax free.
For more information on starting a 529 Plan for your Grandchildren, go to: www.scholars-choice.com/grandparents
All investing involves risk, including possible loss of principal.
Legg Mason, Inc. is not affiliated with GRAND Magazine.
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