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).

college-savings plan

A plan that allows individuals to set aside money in a special account designed to pay for future college expenses. Funds in the account grow tax-deferred, and withdrawals used for college expenses are exempt from federal income taxes. Parents are permitted to change from one state plan to another once a year with no penalty. Many states also offer tax incentives for these plans. Also called 529 plan.
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Pittsford, NY, September 20, 2013 --(PR.com)-- In recognition of September being designated as “College Savings Month,” Savingforcollege.com is helping to increase 529 plan awareness by compiling details of the various contests, sweepstakes and events held by states and their college-savings plans throughout the month.
Through its Upromise affiliates, the company also manages more than $17 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 10 million members and nearly $500 million in member rewards.
The money in the bank can reduce need-based aid, dollar for dollar, especially at two-year institutions, where tuition is relatively low, according to the report, "When Saving Means Losing: Weighing the Benefits of College-savings Plans," released recently by the Lumina Foundation.
In addition, the federal government created the Hope Scholarship and Lifetime Learning tax credit programs, and state governments created prepaid tuition plans and college-savings plans. These state savings plans, called "529 plans," are used by many families to help pay for college.
Strong, based in Wisconsin, and another money manager, MFS Investment Management, oversee most of the $180 million in funds in the state's four college-savings plans, which offer tax advantages that encourage parents to save for their children's education.
Colorado gave current participants the options of switching to other college-savings plans offered by the state without forfeiting tax benefits, staying put, or taking out what they put in and leaving the plan with no penalty.
Beginning in 2001, Colorado residents can deduct all contributions to college-savings plans from state income tax (earnings growth already is exempt).
"Colorado gave investors (in college-savings plans) a couple of big reasons to stay in-state," Hurley said.

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