IRA or 529 Plan for funding education?
Since IRA's can be used for higher education, why would it be advantageous to use a college savings plan (529), versus just funding an IRA?
The key advantage of using an IRA to fund college expenses is that it is deductible (an assumption) when the money is set aside.
According to Bill Roos, EA, more advantages fall in favor of the 529 plan. A few of the advantages include: a higher amount can be set aside each year and five years contributions can be made in the first year to jumpstart the plan; assuming all of the plans proceeds are used for education there is no tax on the interest earned; the student has up to age 30 to apply the funds toward education; and any balance in the plan can be passed to another qualifying student in the family.
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