Start a 529 Plan to Pay for College

May 2008

Here are the steps to complete one of the most important financial tasks for parents -- saving for a 529 plan.

Get a head start online. Find details on 118 state plans at www.savingforcollege.com, and see Kiplinger's favorites at kiplinger.com/tools/529.

Take a tax break. If your state offers a deduction or credit for contributing to its 529 plan (about two-thirds of the states do), invest your college money in-state.

Decide on a beneficiary. You can designate anyone, including your children, nieces, nephews and grandchildren.

Save money. Choose a low-cost plan that you invest in directly rather than through a broker or adviser.

Make it easy. Choose an age-based portfolio that automatically adjusts investments as the child gets older.

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