 Having college savings plans, students of all ages can save for all college costs, including tuition, fees, room, board, textbooks and computers.
Not Limited to In-State Public Colleges or State Residents
At most colleges and universities throughout the country, including graduate schools, withdrawals from college savings plans can be used. Some foreign education institutions also may be eligible. Plenty of states now offer at least one college savings plan that has no residency restrictions. You can reside in Ohio, contribute to a plan in Maine, and send your child to college in California. Nevertheless, if your state offers state tax advantages to residents who participate in the local plan, you'll miss out if you opt for another state's 529 plan.
Covered Education Expenses
Usually, college savings plans cover all "qualified education expenses" at eligible colleges, universities and other post-secondary institutions, including:
o Tuition
o Fees
o Books and supplies
o Equipment
o Room and board
Contribution Limits
You pay money into an investment account on behalf of a designated beneficiary, when you invest in a college savings plan. Contributions can range and are only limited by the maximum and minimum contributions limits set by most plans. The maximum contribution amount differs from state to state, but in the majority of states offering college savings plans, the maximum amount that you can contribute for one beneficiary exceeds $200,000.
You can open a second college savings plan in another state to further increase the amount of contributions you can make. Now the IRS only requires that contributions for one child cannot be more than the amount necessary for the qualified higher education expenses of that child. So if you would like your child to go to an expensive college and graduate school, one option you have is to open more than one college savings plan.
A lot of states also offer very flexible minimum contribution limits. Many of them require a $250 initial contribution with subsequent contributions of as little as $50. In many states these minimum contribution amounts can be reduced even further if you make contributions through payroll deductions or automatic transfers from a bank account.
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