529 Education Savings Plan

April 21, 2020

Education Savings

Responsibly educating the next generation is a noble goal and an important piece of the family financial plan puzzle. Fortunately, getting started is a simple matter.  There are many benefits including:

Tax Advantages

The growth of the money in the account is federal income tax-deferred.

When you’re ready to use the money for qualified education expenses it is free of federal taxes.

There may also be state tax advantages depending on your state of residence.

Versatility

Funds in a 529 account can be used to pay for qualified education expenses at most colleges, universities, vocational-technical schools and can also be used to pay for tuition at eligible K-12 schools.

Who can start a 529 Plan?

Just about anyone can open a 529 plan

  • You must be at least 18 years old
  • You must have a Social Security or Tax Identification Number
  • You must have a permanent legal U.S. mailing address.

Who controls the account?

The money is owned by the person who establishes the account.

The beneficiary can be a member of your immediate or extended family and the original beneficiary can be changed.

Who can contribute?

Just about anyone can contribute; yourself, a friend, a family member.  Some providers provide crowdfunding tools designed to make saving for education easier.

Is there a contribution limit?

Unlike many other tax-advantaged accounts, like IRAs and 401(k)s, there are no annual contribution limits on 529 Plans. With most plans, account owners can contribute $300,000 or more per beneficiary over the lifetime of the account.       

The overall balance of the account cannot exceed the expected cost of the beneficiary’s qualified higher education expenses, which vary by state.

Is there an earnings limit?

There are no income limits on those who contribute to the account.

How is the account invested?

Most 529 account providers offer a range of investment strategies

  • Age-Based Asset Allocations are portfolios based upon the beneficiary’s age and are automatically reallocated over time.
  • Goal Based Asset Allocations are portfolios designed to reflect the amount of risk you are comfortable taking, and the potential return characteristics you prefer.
  • Customized Strategies allow investors to choose from one or a combination of individual portfolios that range from growth allocations to more conservative income portfolios.

It’s easy to get started and most providers have very low minimum investment requirements.  Now is a great time to plan for tomorrow. Reach out for more information on 529 Education Savings plans.

Disclaimer: Campbell & Company 2020-The information in this document is general in nature and the information is changing rapidly and there may be updated information as it becomes available from federal, state and local governments. We inform you that any tax advice contained in this communication (including any attachment) is not intended to be used, and cannot be used, for the purpose of avoiding penalties or promoting, marketing or recommending to another party any transaction or matter addressed.

Jan Carrier
Financial Advisor
7211 Hiawatha Pkwy., Spring Hill, FL 34606
(352) 683-7365

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