Are You Taking Advantage of Your Benefits?
Some employers offer a variety of savings plans that will allow you to set aside funds for your childrens' college educations. The main advantage of these plans is that they will take money automatically out of your paycheck -- before you can spend it -- and earmark it for college. Though the funds are not pre-tax, you still get some tax benefits depending on the investments you choose. Different employers may offer different options.
Some employers allow you to purchase EE Savings Bonds through payroll deductions. These bonds are tax-free, if used for education.
529 plans are also being offered by more employers through payroll deduction. Financial planners consider 529 plans to be one of the best college savings vehicles around. The plans allow you to save money, which grows tax-deferred and can be withdrawn tax-free to pay for education expenses. The money in the account can be invested in various mutual funds. For more on 529 Plans, check out these stories:
This is a new type of account, and it's not yet popular in all parts of the country. Transportation Savings Accounts (TSAs) are offered mainly by employers in large metropolitan areas where commuting can be expensive.
You can set aside pre-tax dollars in TSAs to use for certain travel expenses. For 2003, these accounts permit you to set aside $100 a month, or $1200 a year, for travel to and from work. You can also save $190 a month, or $2,280 a year, to pay for parking. Like 401(k)s and FSAs, the amount you set aside will reduce your taxable income.
Continued on page 5: Insurance Plans: Health Insurance
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