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529 College Savings Plan Information

Everything you need to know to setup a 529 college savings plan

 
 
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529 Savings Account - Who Should Invest?

 

Who Should Open a 529 Savings Account?

  • Investors looking to save for higher education at a college or university—even graduate school.
  • Anyone looking for withdrawals that are free from federal income taxes when used for qualified higher education expenses.
  • Investors seeking minimal impact on a student's federal financial aid.
  • Anyone looking for a college savings option that provides the flexibility to change the beneficiary to another eligible family member at any time.
  • Investors seeking estate and gift tax advantages.

Who Can Contribute and How much

  • Any U.S. resident age 18 and older, including parents, grandparents, and friends of the student beneficiary.
  • Investors who hold other types of college savings accounts, such as education savings accounts and UGMA/UTMA accounts.

    Taking a Tax distribution

  • Withdrawals are free from federal income taxes when used for qualified higher education expenses.
  • Qualified withdrawals online, by phone, or by form.
  • Withdrawals by check or by ACH.

    • All of the account's earnings are exempt from federal tax when they are withdrawn if they are used for qualified education expenses. This means that, unlike the taxes you have to pay on earnings from regular stock investments, you won't pay any tax on the 529 account earnings unless you end up using the money for something other than higher education. Earnings are currently tax-deferred in most states, as well.
    • A break on the earnings tax isn't the only tax advantage, either. Although your contributions aren't pre-tax (you pay state and federal tax on the money you put into the account), there are some states that let you deduct a portion of your contributions from your state taxes. More states will probably follow suit in the coming years

 

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