Your CREDIT Your MONEY|October-December 2016

529 College Savings Plans Can Help Ease Your Top Financial Concern More than 70 percent of parents with children under 18 say that paying for college is their top financial concern, according to Gallup’s 2001-2015 Economic and Personal Finance survey.

Young adults are worried too. Asked by Gallup to identify the top financial problem facing their families, more than one in five respondents aged 18 to 29 said it was paying tuition or college loans.

Fortunately, there’s a way to put money aside for education in an investment account where the savings can grow over the years, free from federal income taxes. What’s more, the student doesn’t have to pay federal income taxes on withdrawals from the account, as long as the money is used for qualified higher education expenses, which include tuition, books, fees, supplies and other approved expenses at accredited institutions.

“With the costs of higher education continuing to rise, knowledgeable families are taking advantage of 529 college savings plans,” says Kris Spazafumo, Vice President, Investment Services, at Los Angeles-based American Funds, which manages College- America. It’s the country’s largest 529 plan, with nearly $50 billion in assets, as of March 31, 2015. “More than 1.2 million families nationwide are now saving for college with College America on behalf of 2.1 million future college students, and we expect that number to grow as more people become aware of the many benefits that 529 plans offer.”

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