RESOURCES:
College Savings for First Responders and Police Officers

Why? 100% of you are going to retire at some point, but what percentage of your kids are going to go to college, 50%, 60%??  Who knows the real number, all we know is the last thing you want to do is save a ton of money for college before taking care of your retirement?

What if little Johnny wants to become a plumber, or worse a firefighter (we couldn’t’ resist, we still love our brothers and sisters on the FD side 😉)?  There’s nothing wrong with that, but if you saved for college before your retirement you could be left with a huge college plan and no retirement, looking at potential penalties for not using the college plan for college.

When it comes to college savings, the 529 college plan is a great fit for first responders and their families. There are 2 types of 529 plans: the 529 savings plan and the 529 prepaid plan. Both are effective ways to save for college, but they are handled differently, with their own set of rules.

529 Savings Account

• Tax-free earnings as long as the funds are used on qualifying expenses.
• High contribution limits that are tied to the current years gift tax allowance.
• You can start one as soon as the child is born, giving you up to 18 years to save for college.
• Broad definition of qualifying expenses that now even include using some of the funds to pay for education expenses prior to college.
• No income limits so it doesn’t matter how much you make; you can contribute to this.
• Can also be gifted up to a first cousin if your child doesn’t end up going to college.
• No age restriction, so you don’t have to use it up by age 30. This also means you can give it to yourself or your spouse for use in going back to college.

529 Prepaid Plan

• Plan is designed to keep pace with inflation.
• Tax-free earnings as long as the funds are used on qualifying expenses.
• Full principal is protected from market fluctuation.
• Allows you to prepay for college expenses at today’s rate.
• They may not honor the prepaid tuition depending on the rules.

Starting a college fund is easy. There are tons of discount brokerage sites that will allow you to open up these accounts and best of all they’re usually free of management fees.

*Disclaimer – For more information about  any of these college savings plans always refer to the one and only www.irs.gov  for the most up to date rules and definitions.