Don’t confuse retirement savings with a 529 Savings Account. The 529 Plans are designed to help families save for college costs. These are tax-free accounts specifically designed for educational expenses and if you try to use them for retirement, you will be assessed a penalty.

Whenever you sign up with a prepaid 529 plan, you are usually backed up on your money. That means if something happens, the state will guarantee you your money back. However, the 529 savings account plans do not have this kind of guarantee. This means that you are putting yourself at risk by using this kind of account. There are many different benefits to having a saving plan, however, you can see that there are also some down sides to it as well. This can be found with just about any plan you choose to go with. So be sure to choose your plan carefully.

If you are thinking of setting up some section 529 plans but still do not know if it’s for you or not, here is a little something to help you out. At the end of the year you are will not get a 1099 to report your taxable or nontaxable earnings. Until the year you make your first withdrawals, you are not going to have to deal with any of that. This makes filing your taxes a lot easier at the end of the year. After all, a 1099 is a way to report earnings to the IRS that you make from something other than a place that you are employed. However, this is something hat you are not going to have to concern yourself with.