Intro to 529 Plans
A 529 plan can be a great way to save for college expenses.
A 529 college savings plan is a state-sponsored plan for the educational benefit of a child or adult and can be a good choice if your main goal is to use the money for college costs for you or your kids. Each state has their own plan, and you’ll usually get the best state tax benefits from picking the 529 plan from your home state. But if there’s one more beneficial for you, you can choose a different state’s plan.
We can help you look at your choices to see what college savings plan might benefit you most. To see a comparison of all state 529 plans, the College Savings Plans Network offers really helpful 529 plan comparison information.
Who it’s For
A 529 plan can be a good choice if your main goal is to use the money for college costs for you or your kids, and you want high contribution limits. If you want more flexibility with how you can use the funds, you may want to consider a different college savings plan option.
We’re here to help. A local COUNTRY Financial representative can help you review your options and figure out what makes the most sense for you and your family.
How it Works
Who can contribute
Almost anyone can contribute to a 529 plan – parents, grandparents, friends, corporations and tax-exempt organizations.
How much you can contribute
The maximum total contribution varies by plan, but the limits are usually over $200,000 per beneficiary.
You can make contributions to 529 plans for as many beneficiaries as you want, and there’s not a specific age when the beneficiary has to start using the money.
The money in a 529 plan can be used at any accredited public or private colleges in any state.
Investment choices vary depending on the plan. We’ll help you look through your choices so you can decide what’s best for your timeline and goals.
Ownership and control
The beneficiary doesn’t have control of or access to their 529 plan – only the plan owner does.
You can make any amount of income and still contribute to a 529 plan.
Taxes on Contributions
All contributions are made after federal taxes, but contributions qualify for the $14,000 annual federal gift tax exclusion ($28,000 for joint filers)..
Qualified Education Expenses
Qualified expenses include tuition, books, fees, supplies, equipment, and reasonable room and board.
Earnings and Withdrawals
Earnings in a 529 plan grow income-tax deferred. You won’t pay taxes on withdrawals either, as long as they’re used to pay for qualified education expenses (see below). And depending on what state you live in and which 529 plan you choose, contributions may be state tax-deductible.
Using Money for Unqualified Education Expenses
Most states have no age limit for when the money has to be used. So there’s flexibility if a child decides to take some time off before deciding if college is right for them. You can also choose to change the beneficiary to another family member.
Withdrawals of earnings not used for educational purposes may be subject to a 10% penalty. Those withdrawals will be included in the beneficiary’s taxable income.
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For 529 plans, the investment objectives, risks, charges, and expenses of municipal fund securities should be carefully considered before investing. The official statement, which can be obtained by calling (866) 551-0060, contains this and other information about the municipal fund securities and should be read carefully before investing.
The information contained herein is general and should not be considered legal or tax advice. Laws of particular state and your particular situation may significantly affect the general information presented herein. The availability of the tax or other benefits mentioned above may be conditioned on meeting certain requirements. State tax deductions mentioned here may only be available if you invest in a 529 plan offered by the state in which you reside. COUNTRY Financial and our representatives cannot give tax or legal advice. You should consult your attorney or tax advisor regarding your specific legal or tax situation.
529 College Savings Plans offered by each state differ in options and benefits. The plan for you depends on your specific objectives and circumstances. Please consider each plans investment options, fess, and state tax implications. You should consult your attorney or tax advisor regarding your specific legal or tax situation.
Registered Broker/Dealer offering securities products and services: COUNTRY® Capital Management Company, 1705 N. Towanda Ave, PO Box 2222, Bloomington, IL 61702-2222. tel (866) 551-0060. Member FINRA /SIPC