It is essential to make plans, especially when it comes to educational funding. Backers are one of the best methods for this. Backer offers plans that provide families with plenty of benefits and opportunities to save for their child’s college education.
Let’s discuss the specifics of a Backer 529 plan, its advantages, and account opening procedures. We will also discuss common misconceptions about backers and the reasons why they are an excellent investment for a lot of families.
What is Backers?
Backer is a well-known financial company that provides 529 plans. It is owned by a parent company named Principly, Inc., which was founded in 2016. Backers was previously known as CollegeBacker. Students who are trying to prepare for future educational costs can benefit from tax-advantaged savings plans offered by Backers. Your friends and family can also contribute to your savings by using a backer link.
The only states that don’t provide extra tax advantages are Alaska, California, Delaware, Florida, Hawaii, Kentucky, Nevada, New Jersey, North Carolina, South Dakota, Tennessee, Texas, Washington, and Wyoming.
When you invest money in Backers, you can pay the tuition, accommodation, board, books, and other applicable educational costs at qualified institutions, such as US-based colleges, universities, and technical colleges.
Backer offers different services like:
- Cashback Rewards
- 529 Plans
- Contributions
The Backers website makes it easy for you to save for college in America in a convenient way.
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Backer 529 Plan
Choosing a Backer 529 college savings plan can help you start investing early in the case of personal finance. To take advantage of the Backer’s 529 savings account, you can even link any existing 529 plans you may have. Some significant features of a Backer 529 plan are discussed below:
Tax Benefits
The tax benefits of a Backer 529 Plan are one of its most essential features. Plan contributions grow tax-free, which means that as long as the money stays in the account, you won’t have to pay taxes on the gains.
The withdrawals for eligible educational expenses are often tax-free at the state and federal levels. This makes Backer an attractive option for families that want to maximize their resources.
High rate of return
If we look at the S&P 500’s historical performance, Backer projects an 8% rate of return versus 5% inflation. If you invest $100 before your child’s first birthday, it could grow up to $500 by the time they turn 18.
Flexibility
Backer 529 Plans provide freedom for both beneficiary and fund use. You can switch up your 529 investment options two times a year. You can also transfer money into another 529 plan once a year. Backer offers so much flexibility that you are free to modify the beneficiary at any moment.
High Contribution Limits
As compared to some alternative savings options, Backer 529 Plans provide high contribution limits. It allows families to save considerable amounts for their child’s college expenses gradually. You can even use up to $10,000 annually with some programs. Other eligible expenses include college textbooks, necessary equipment, and student loans up to $10,000 for the beneficiary and each sibling.
No Income Limits
Backer 529 Plans are available to families of any income level because they have no income limits, as compared to some other education savings choices like the Coverdell Education Savings Account. The minimum contribution for most plans is from $0 to $25. Family savings options are broad because the lifetime maximum contributions go from $235,000 to $529,000 based on the state.
How to Open a Backer Account
The process of opening a Backer plan account is simple. Below are the steps to help you open the account easily:
- Step 1- Go to the Backer website: Open the web browser of your choice and go to the Backer website. Type “backer.com” into the address box, and hit Enter.
- Step 2- Click “Sign Up”: Find the “Sign Up” button in the top navigation bar or on the homepage. The process of registration will begin when you click on it.
- Step 3- Complete the Registration Form: To fill out a registration form, you will usually be asked for basic details like your name, email address, and account password. Complete all necessary fields with accuracy.
- Step 4- Verify Your Email Address: After the completion of the registration form, Backer will email the address you provided with a verification. Look for this email in your inbox (as well as in your spam or trash bin). Verify your email address by clicking the verification link in the email.
- Step 5- Finish Your Profile (Optional): You might be asked to finish your profile when your email has been verified. Although it’s optional, further information like your location, interests, and profile image are requested.
- Step 6- Create a Plan: Enter the age of your child and the financial goals to create a plan. Add your beneficiary details and personal data.
- Step 7- Proceed: Check the 529 plan that Backer recommends. Now click Looks Good to move further.
- Step 8- Submit Application: After reading the Advisory Agreement and Terms of Use from Backer, click “I agree” if you agree. Review your application and make the necessary changes. Choose Submit Application after that. You can ask friends and relatives to contribute after your application is complete.
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Backer 529 Plan Myths
Backer has many benefits, but some people still believe in myths associated with these 529 plans. Let’s discuss some common Backer 529 plan myths.
Minimum Contribution Limit
There is a misconception that there is a minimum contribution limit in a Backers account. The current maximum contribution is $15,000 per child account per income tax year, although no minimum contributions are required.
However, this means that a single person can fund a child’s education up to a maximum of $15,000 tax-free.
Loss of Control
Another myth is the idea that registering for a Backer 529 Plan means giving up control over your money.
In reality, the account owner still has authority over the account and is able to modify investment selections, alter the beneficiary, or even take money out of the account (with taxes and penalties applied) if needed.
Only for Children
Many people believe that Backer’s plans are only to save for a child’s education. It is not valid.
Students themselves can utilize Backer 529 Plans for college backers. It is also not necessary for the recipient to be a family member; it could be a friend, spouse, or even the account owner.
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Final Thoughts
If you are concerned about your child’s future and want to save money, then Backer is the answer for you. These plans are a great way to invest in your child’s future because they are flexible, have tax advantages, and high contribution limits.
Families can make good use of Backer plans by creating an account on Backers and utilizing all benefits. A Backer 529 Plan can help clear your path to a more promising future in your child’s education and future.
