One of the easiest ways to save money for college is for students to open a savings account with their parents. Simply putting a few dollars each month into a savings account helps. A few additional ways for parents to begin saving for their children's education are listed below.
Indiana's CollegeChoice 529 Investment Plan
Indiana’s CollegeChoice 529 Investment Plan is a valuable investment vehicle for everyone to consider. It combines attractive tax benefits with flexible investment options to help pay for qualified college-related expenses.
For Indiana residents, there are many benefits:
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As an added benefit to Indiana families, contributions to CollegeChoice accounts are rewarded with
20% credits (up to $1,000) on state taxes. For example, a typical $5,000 deposit earns a $1,000 Indiana state tax credit, which also represents an immediate 20% return on the investment.
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Because of the importance of planning for life after high school, every Hoosier family should consider if and how opening a CollegeChoice account can help with paying for college.
Learn more about
Indiana's CollegeChoice 529 Investment Plan
Upromise
When you sign up for Upromise, a portion of the money you spend on eligible purchases for groceries, gasoline, online shopping, and other items and services can be contributed to a college savings plan. Friends and family also can sign up and designate their Upromise rewards to your account.
Learn more about Upromise
Education Savings Accounts and IRAs
Investing money in a Coverdell Education Savings Account (formerly an Education IRA) allows parents to accumulate tax-free interest and withdraw money from the account without penalty. According to federal tax law, regular IRAs and Roth IRAs can also provide penalty-free money if funds are withdrawn for educational purposes.
Learn more about ESAs and IRAs
Tuition Account Plans
Prepaid tuition plans, also known as tuition account programs, are college savings plans that are guaranteed to increase in value at the same rate as tuition. The main benefits of these plans are that they allow parents to lock in tuition at current rates. Moreover any family member can invest. In addition, prepaid tuition plans are often exempt from local and state taxes, but the child must pay federal tax on the plan at the time it is used.
For more information regarding this option, visit the IRS Web site to read more about the Taxpayer Relief Act of 2001 section 529.