Many parents and grandparents are taking advantage of 529 college savings plans. They offer tax-deferred savings for future education, allowing familes to prepare for big tution payments. When shopping for plans, most investors understand that overhead costs can vary, with index-based funds offering the lowest fees. And deciding how much to invest depends on several factors, including income and projected tuition costs. As with any investment, prospective investors should consult their personal financial advisor.
Less understood, however, is that although 529 plan investments cannot be deducted on federal income taxes, some 28 states offer deductions on state taxes, along with widely varying incentives. Does your state offer deductions? How much could viewers and listeners in your area save by comarison shopping between plans? Explaining what your state offers could make for an interesting personal finance story.
CNN Money summarizes the findings of a full state-by-state report from Morningstar.
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