Saving for College? Your Guide To 529 Plans

Saving for College? Your Guide To 529 Plans

August Employee of the Month- Austin Krise
August 26, 2019
Borrowing Against Your Retirement Plan: More Costly Than You Think
September 4, 2019
August Employee of the Month- Austin Krise
August 26, 2019
Borrowing Against Your Retirement Plan: More Costly Than You Think
September 4, 2019
There’s no better investment than one in your child’s future. However, the cost of higher education comes with a pretty steep price tag. On average, the yearly cost for an in-state, public college is $25,290 and for private schools, the average nearly doubles for an average of $50,900.

With college tuition prices continuously rising, how can you best prepare for education expenses?

It is best to start saving for college sooner rather than later. There are a number of options and strategies available to help you budget for the books. One of the more well-known and attractive options for college savings are 529 plans. We know that when it comes to investing your money you want to know all of the details. So we are answering all of your 529 Plan questions.

What You Need To Know

What are 529 Plans?
529 Plans are flexible investment accounts that offer tax-free growth and tax-free withdrawals for qualified college expenses. Traditional 529 Plans allow you to invest your after-tax contributions in mutual funds or similar investments and will fluctuate in value based on the performance of the fund.
What are the Benefits?
These college savings plans are favorable for their tax benefits, including:
  • Earnings grow tax-deferred
  • Some states offer income tax deductions and tax credits
  • Not subject to the federal gift tax for contributions up to $75,000 (considered a 5-year spread)
  • Withdrawals are tax-free when used for qualified education expenses
What are Considered Qualifying Expenses?
  • Tuition and fees
  • Textbooks and supplies
  • Equipment
  • Computers
  • In some cases, room and board or rent is considered a qualified expense given that the student is enrolled at least part-time. There are additional regulations depending on whether the student lives on campus or off campus. Ask one of our team members for information on housing expenses.
What is Excluded?
  • Student's health insurance
  • Transportion
  • Student loan payments
Can I Open a 529 Plan?
Any U.S. resident over the age of 18 is eligible to open a 529 plan. There are no income restrictions associated with 529 accounts. Get started by speaking with one of our financial professionals.
Are you an Employer?
There is an Employer 529 Plan available that you can set up for your employees. Ask one of our Advisors about this no-cost to you benefit for your employees.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and 529 Product Program Description, which can be obtained from a financial professional and should be read carefully before investing. Depending on your state of residence, there may be an in-state plan that offers tax and other benefits which may include financial aid, scholarship funds, and protection from creditors.. Before investing in any state's 529 plan, investors should consult a tax advisor. If withdrawals from 529 plans are used for purposes other than qualified education, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.

Stay in Touch!

Subscribe to Our Monthly Newsletter & Never Miss a Duncan Detail!

One call. One company. ALL under one roof.