Being a parent is extremely rewarding. However, it’s also full of stress and responsibilities. And with the cost of college tuition continually soaring at an alarming rate, saving for education definitely weighs heavy on parents’ minds.
Thinking Beyond the 529 Plan
When having a conversation about saving for college, sooner or later, someone will bring up the 529 Plan. That makes sense considering how the main point of the 529 Plan is to help parents save for their kids’ education. However, that doesn’t necessarily make the 529 Plan the best option for saving for college. In fact, the Roth IRA can be quite better in a couple of different ways.
With the 529 Plan, all of the money saved must go towards college related expenses. So if your children do not end up using all of the saved money for its intended purpose, you will encounter a penalty for withdrawing any of the remaining money. Meanwhile, with the Roth IRA, whatever money your children doesn’t require for college can easily be used for something else. Therefore, you won’t be penalized if your children opt to not go to college or are able to gain full scholarship.
Withdraw Contributions for Any Reason
The money that you contribute to your Roth IRA account is yours to take at anytime without any penalty fees. So even if your children don’t end up needing the money for college, you can still give the money to them for something else. That way, you’re still able to help your children get a good financial start in life.