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The main tax advantage of 529 plans, the tax-free withdrawal, could potentially go away if the EGTRRA tax act of 2001 is not made permanent by Congress before 2010. In addition, new savings account legislation being proposed by the Bush administration would create a solid alternative. The proposed lifetime savings account (LSA), would have many but not all of the features of the 529 plan. Since both accounts will have more or less the same tax advantages, you will need to look for other reasons to use 529 plans if you one day have a choice. Since LSA's would be a more flexible account type with no restrictions on how the money is spent, the reasons left for 529 plans are limited to account control and contribution limits. 529 plan accounts always remain in the control of the owner, not the beneficiary, hence they are revocable. And... the 529 plan may still remain the only way to shelter a very large amount of money in a single year. Click here to find out more about the new proposed Lifetime Savings Accounts... |
529
Plans These new education savings