529 Plans vs. Roth IRA
Which is best for college savings?
According to Lloyd Sacks, a Certified Financial Planner and managing director of the private client group at Sacks & Associates, contributing to a 529 plan has some benefits when it comes to your taxes. “Some states allow a deduction for contributions made to in-state 529 plans,” he said.
That deduction can help reduce your taxable income, potentially leading to a smaller tax bill. Roth IRAs don’t offer the same benefit. However, withdrawals from Roth IRAs contributions are free from income taxes.