Any way that you can save for college is a good way, but 529 plans were specifically created to save for college and have tax advantages. MEFA’s Associate Director of College Planning Jonathan Hughes explains how to set up a 529 account, how the money is invested, where the funds can be used, and which expenses the funds cover.
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[00:00:00] Hi everyone. Jonathan from MEFA here, and this is 90 Seconds with MEFA.
Today we’re gonna be talking about 529 college savings plans. Any way that you can save for college is a good way, but 529 plans were specifically created to help families save for college and have tax advantages when used for college savings. Most states offer a 5 29 plan in Massachusetts. That’s MEFA’s U Fund and this is how it works.
You set up an account with an owner, possibly a parent, but not necessarily, and a beneficiary who is the child. Next, you put money into that account. Money is invested in the market. In the U.Fund. Fidelity manages the investment and services the customer’s accounts. That money grows tax deferred when you access the funds as long as you use them on a qualified educational expense like tuition and fees, room and board.
Books, supplies and equipment you pay no taxes on the earnings. 529 funds can be used [00:01:00] at any accredited school in the country and even some foreign institutions. If your state is like Massachusetts, they may offer a tax deduction or another benefit in exchange for participating in a 529 plan. And even though 5 29 plans were designed for college, you can now use 529 funds to include apprenticeship expenses, K through 12 expenses, and repaying student loans.
Thanks for watching. For more information, please call 1-800-449-MEFA or visit MEFA.org.
