Wednesday, March 11, 2009
While you do not get a federal income tax deduction for contributions to a 529 college savings plan, you do benefit from the tax-free growth of the account. The key factor is that your account must grow to realize that benefit. As you probably know, your 529 plan is subject to the same risks as most other investments. Parents with younger children who will not be using the investment in the immediate future are less concerned with the market woes. You can imagine the disappointment of a person needing to use their account now or in the near future and the value of their account has dropped 30 – 50%.