529 College Funds

529 College Funds

A 529 College Savings Plan is an education savings plan operated by a state or educational institution that can help you set aside funds for future college costs. Most states offer a 529 plan that can be used to meet the cost of qualified colleges both in-state and out-of-state.

The 529 plan is a great way for parents or grandparents to shelter inheritance money from estate taxes and contribute substantial amounts to a student’s college fund.  A 529 Plan (named after Section 529 of the Internal Revenue Code) provides special tax benefits including both federal and state benefits, simplified tax reporting and flexibility. You can maintain control over your own funds and the amount you can put into a 529 plan is substantial.

In addition, there are no income limitations or age restrictions.

  • Anyone can invest on behalf of your child. Parents, grandparents, aunts, uncles, and friends can all contribute to the account. Contributions can be as low as you like or as high as $370,000 over the life of the account.
  • Change in plans? If a child decides not to attend college, you can switch the account to anotherfamily member, including yourself. You may change the beneficiary as many times as you like to another member of your family, as defined by the IRS.
  • Three options if your child decides not to attend college:
    • Leave the assets invested in the plan for later use
    • Change the beneficiary to another family member
    • Withdraw the assets and pay a 10% additional tax

You control the account, even when the child reaches legal age. As account owner, you retain control over withdrawals for the life of the account.  This benefit is not offered by non-529 education savings accounts such as UGMAs and UTMAs, whichtransfer assets when the child reaches legal age.

*Investments in 529 college plans involve investment risks. Although plans are established and maintained by states, the states do not provide guarantees against investment loss, except in certain very limited cases. As with any investment in a mutual fund, or other equity security, an investment in a 529 college savings plan can decrease in value. Furthermore, although the past performance of available investment options in a 529 college savings plan may be one of several appropriate factors to consider in choosing an investment, such past performance is not necessarily indicative of how a particular investment vehicle will perform in the future.

 Call Shelly Dodge at 972/539-0002 today to schedule a complimentary consultation to review your financial goals and discuss the various options for 529 College Savings Plans.