529 college savings plan

529 College Savings Plan

An account into which persons deposit funds to save for university-related expenses. The funds in a 529 college savings account are tax-deferred and, if used directly to pay for college, tax exempt at the federal level. They are sometimes exempt at the state level as well. The plan exists in an attempt to make post-secondary education more affordable. See also: IRA, 401(k).

529 college savings plan.

Each 529 college savings plan is sponsored by a particular state or group of states, and while each plan is a little different, they share many basic elements.

When you invest in a 529 savings plan, any earnings in your account accumulate tax free, and you can make federally tax-free withdrawals to pay for qualified educational expenses, such as college tuition, room and board, and books at any accredited college, university, vocational, or technical program in the United States and a number of institutions overseas.

Some states also exempt earnings from state income tax, and may offer additional advantages to state residents, such as tax deductions for contributions.

You must name a beneficiary when you open a 529 savings plan account, but you may change beneficiaries if you wish, as long as the new beneficiary is a member of the same extended family as the original beneficiary.

In most cases, you may choose any state's plan, even if neither you nor your beneficiary live in that state. There are no income limits restricting who can contribute to a plan, and the lifetime contributions are more than $300,000 in some states.

You can make a one-time contribution of $60,000 without incurring potential gift tax, provided you don't make another contribution for five years. Or, you may prefer to add smaller amounts, up to the annual gift exclusion.

References in periodicals archive ?
As to what motivates people to open a 529 college savings plan, only 15.1% credited the advice of a financial professional.
Victory Capital Holdings announced that it has completed the acquisition of USAA Asset Management Company, which includes USAA's Mutual Fund and ETF businesses and its 529 College Savings Plan. Victory Capital also announced that it has increased cost synergy estimates for the transaction from $110M to $120M.
In many cases, you can revisit the decision later, if necessary refinance your mortgage, move your retirement funds or choose a different 529 college savings plan.
* Of the parents who are saving for their children's education, the majority are using a checking or savings account--only 18% are using a tax-free 529 college savings plan. For younger parents (ages 18-35), just 13% are taking advantage of saving with a 529 plan.
my529 has been providing families in Utah and nationwide with a high-quality 529 college savings plan for the past 22 years.
We also need to move beyond simply advising families to save money in a 529 college savings plan. When having the college conversation, we need to be able to talk to clients about creative strategies such as attending a community college, taking a gap year, exploring online education opportunities, implementing tax-planning strategies before the base financial aid income year, and timing 529 college savings plan distributions effectively (see the sidebar "Clients Can Save for College Before Children Enter the Picture" for other 529 planning strategies).
Most of those accounts have been through the Oklahoma 529 College Savings Plan. But ONAC operates in other states as well for example, the Eastern Shawnee Tribe of Oklahomas seat of government near the state line so ONAC helped establish accounts in Missouri.
The advisor-sold Franklin Templeton 529 College Savings Plan from New Jersey was downgraded from neutral to negative, while the direct-sold CollegeInvest Direct Portfolio from Colorado was downgraded from bronze to neutral and New York's 529 Program was downgraded from silver to bronze.
The money could go into a tax-protected 529 college savings plan or a simple savings account.
A 529 college savings plan lets you save money for college in an individual investment account that offers federal tax advantages.
It was founded more than 30 years ago and has since expanded into new markets within the financial services industry to offer a suite of defined contribution and defined benefit retirement plan solutions, benefits education, 529 college savings plan recordkeeping, and IRA and health savings account administration.