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What have state lawmakers done to make 529 plans even more enticing?

While the thought of their child someday being admitted to one of the best colleges or universities in the nation likely fills most parents with great pride, it likely also fills them with a certain amount of anxiety. That's largely because the cost of college has skyrocketed in recent years and is showing no sign of slowing down.

In recognition of this reality, lawmakers across the nation have created what are known as 529 plans, which are designed to help parents, grandparents and other family members fund the higher education expenses of loved ones.

What exactly makes a 529 plan any better than a standard savings account?

In general, 529 plans are tax-advantaged, state-sponsored college saving accounts that allow family and friends to invest money in a variety of otherwise inexpensive portfolios. As far as the tax advantages are concerned, they can be realized by both the investor and the beneficiary.

Does Georgia have its own 529 plan?

Georgia's 529 plan is called the Path2College 529 Plan. As recently as the end of March, it had over 134,000 beneficiaries and $1.9 billion in investments. Furthermore, more than $464 million of its funds have been withdrawn by well over 29,000 families to fund higher-education expenses, including tuition, books, and certain room and board costs, to name only a few.

What are the tax advantages of the Path2College 529 Plan?    

The tax advantages of this plan are plentiful. Specifically, any earnings realized on investments are tax-free at both the state and federal level, while any withdrawals for qualifying higher education expenses are also tax-free at both the state and federal level.

Furthermore, thanks to legislation signed by Governor Nathan Deal just last month, joint filers in Georgia may now deduct as much as $4,000 per year per beneficiary starting on next year's state income taxes. (The amount remains at $2,000 per year per beneficiary for those filing a single return or as head of household.)

As you can see, a 529 plan presents an incredible savings opportunity for those looking to help make the college dreams of their younger loved ones a reality.  

In the unfortunate event you encounter some sort of legal difficulties relating to a 529 plan or any other state tax matter, please consider speaking with a skilled legal professional who will work hard to resolve the problem both efficiently and effectively.

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