How I Avoid Paying Taxes [Dow Jones Industrial Average 2 Minute(INDEXDJX:.DJI)]

529 plans just for the annual deduction on their state income taxes. They may never use the money, but it can easily be transferred to their children or grandchildren. (Many 529s, like Pennsylvania’s plan, also provide appealing inheritance and gift provisions as well.)

Another unknown benefit of the plans is that you can open an account in any state. You’re not locked into your home state’s plan.

I recommend looking at Utah’s plan. It allows savers to invest in an Oxford Club favorite… ultra-cheap Vanguard funds. Its most expensive option comes with an annual fee of just 0.38%.

The bottom line is that your kids, your grandkids… or even the neighbor’s kids… are going to college. And it will be expensive. Managed poorly, they could start their working lives overwhelmed with debt.

Managed properly, however, you can invest for their education and lower your tax burden along the way.

Kids are great fun… they’re also a great way to slash your taxes.

Good investing,

by Andrew Snyder, Editorial Director

Investment U provides cutting-edge research and strategic financial recommendations for all levels of investors through its morning publication Investment U Daily and its related publications.

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