Some 39 million households, accounting for almost 90% of U.S. families, will receive the enhanced Child Tax Credit. The Internal Revenue Service will issue the payments the middle of every month, from July 15 to December 15.
But just like the government’s previous COVID-related stimulus payments, some parents will regard the payments as a windfall. Seth Mullikin, principal at Lattice Financial in Charlotte, N.C., says this is a “good problem to have.” Surprising benefits of 529 plans Families can withdraw money from a 529 account without paying federal and state income taxes on it in most states, as long as the funds go toward qualified higher education expenses like tuition, books and laptops.
Like 401 accounts, 529 accounts are defined-contribution plans tied to market performance. How the money is invested depends on the risk tolerance and the number of years before college starts. By the end of 2020, there were almost 15 million 529 college savings accounts, according to the College Savings Plans Network, an organization offering information to states running college savings plans.
Not only does it give an individual the obvious advantage of getting a head start on saving for retirement, but owning such an account can put retirement on your child’s radar and kickstart their retirement planning. The current maximum annual contribution for a custodial account is $6,000, or the the maximum of a child’s earned income for the year — whether it’s babysitting or gardening — whichever amount is less, according to Fidelity Investments.
Roth IRAs are not deemed an asset by federal financial aid formulas when assessing parents ability to pay for their children’s college fees, Valega said.
It translates to around $15 per week-day, Monday through Friday.