529 Plans

Whether a college education is a distant dream you hold for your newborn child or grandchild or just around the corner, a 529 college savings program has many benefits.

A 529 Plan* is an investment plan operated by a state, designed to help families save for future college costs or private high school education. Anyone can contribute to these savings vehicles - parents, grandparents and friends. Some plans let you prepay college tuition, others allow you to accumulate and invest education funds. Earnings on investments in a 529 plan grow tax-deferred, and withdrawals are exempt from federal taxes when the money pays for qualified education expenses.

Each state offers a plan whose assets are professionally managed either by the state’s treasurer’s office or by an outside investment company. Typically, your state plan offers state tax deduction benefits for contributions. You are not restricted to just the plan offered by your own state. However, there may be state tax implications for selecting another state’s plan.

They key benefits include:

• Earnings grow tax-deferred for as long as the money stays in the plan
• Withdrawals used for qualified expenses are not taxed
• The account holder stays in control of the assets in a 529 account
• The named beneficiary has no rights to the funds; in fact, the account holder has the flexibility to change beneficiaries at any time, but only once per year
• Everyone is eligible to take advantage of these plans—there are generally no income limitations or age restrictions
• 529 plans can now be used for private high school education

Contact John or Alan to help with understanding the college savings plans available to you.

* Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.