The 529 Plan is a great way to save for your child's education. Even if the current rules expire in 2010, I still think that contributing money into a 529 account on behalf of your child makes sense for the following reasons:




1. Money invested within a 529 account grows tax-deferred (and at some time, the stock market has to go up again).




2. Money contributed to the 529 account is money earmarked specifically for your child's education.




3. Even if the rules revert to the original 529 rules, when the money comes out, the earnings will only be taxed at your child's rate, who will most likely be in the lowest tax bracket during college.




And I'm putting my money where my mouth is with 529 plans. I have a 4 year old son and a 3 year old daughter, and am contributing money into a 529 plan for each of them.




One potential downside to 529 plans is that they may impact the financial aid that you're ultimately eligible to receive.

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Replying to:

I recently gave birth to our first son and he hopefully will enter college around 2020. Should I trust that Congress will vote to continue the great tax savings of the 529 plans, which will expire in 10 years, or should I invest in some other vehicle?

Zip Code: cpa@mdtaxes.com