ATLANTA (FOX 5 Atlanta) - Starting this fall, college costs are going up not just in Georgia but nationwide. So, it's important to start saving as soon as you can.
Saving for college is now two-fold. Parents are going to help pay their child's way through school, and they can get a tax deduction. Start as soon as you can with the state's Path2College option.
If you're married, Georgia allows a tax deduction on the first $4,000 you put into savings per child, per year. The defintion of what school means is broad: vocational, four-year public or private, graduate school, medical and law schools. All of it.
But, according to Lisa Brown, a partner at Brightworth and money manager, there's more:
"And also starting last year a law was passed on a federal level saying you can use the money in a 529 Plan for private K-12, as well, up to a withddrawal of $10,000 a year, so we now have a very long time frame to educate our children through this 520 Plan for those funds," Brown says.
Brown says grandparents can put $15,000 into that fund too. Two grandparents? $30,000. And they can frontload five years' worth. So, $30,000 for five years is $150,000. But wait, there's more. They don't have to pay a tax on the transfer of that very generous gift. They will have to report it, but it's for informational purposes only.
That's a lot of flexibility. Anyone can use it starting in kindergarten, all the way through. But, if they have to pay for either lower school or college, money managers will say to pay for K-12 out of pocket and save it for college because it earns interest while they wait - like a 401K would.