The best possible way for parents to save money for their children’s education is to save money in 529 state sponsored college savings plan. The savings under this plan are tax-sheltered which, though complex, offers a variety of investment options and other tax saving options. However, the provisions of the plan vary from state to state.



Though the provisions of tax exemption of the 529 plan was planned to expire in the year 2010 but even in this case enrollment under this plan is quite beneficial. However, if the tax exemption related provisions are seized in the year 2010, there might be a sharp fall in the investment under this plan.



Even if the provisions expire its going to benefit the people covered under it, more specifically those who are high tax categories. They would be able to defer taxes or to move the tax on investment income to the student who will be in low tax brackets. Further, the student can offset the tax with education tax credit.



Via New York Times