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[quote=Anonymous][quote=Anonymous]What if I saved the same amount of money in a savings account or invested in an index fund? What would I be losing? How much is the tax benefit if I earn about $200K?[/quote] The main tax benefit of 529s is that the growth is untaxed (if used for valid educational expenses), much like a Roth IRA for retirement. In some states you can get a small deduction on state taxes for some small amount of yearly contributions, depending on the 529 in which you invest. However, if you plan to invest a nontrivial amount, then the expense ratio of the fund you choose is much more important that the possible state tax deduction.[/quote]
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