College students_square

Start Saving for College

09/06/2023 Written by: Kristine Simmons

September is College Savings Month and 529 plans across the country are helping celebrate by holding promotions, contests, initiatives, and virtual events. Saving for college is important year-round, but September, when kids are heading back-to-school, seems like a good time to inform and remind parents, grandparents, and relatives ways to help save for college.

 What is a 529 Plan?

A 529 plan is an investment account that offers tax benefits when it is used to pay for qualified education expenses for a designated beneficiary.1 A 529 plan is not just for college tuition. The plan can be used for K-12 tuition, apprentice programs, and/or to help pay for student loans during repayment.

 Types of 529 Plans

There are different plans you can choose from to assist in saving for college. They are typically categorized as Education Savings Plans or Prepaid Tuition Plans.

 Education Savings Plans – Acts as an investment account to assist in saving for your beneficiaries’ future by investing your after-tax contributions in mutual funds or similar investments. Typically, age-based portfolios shift toward conservative investments as your student gets closer to college age.

 Prepaid Tuition Plans – Allows you to purchase units or credits at participating colleges and universities for future tuition at current pricing. This type of plan cannot be used for K-12 tuition or room and board at the college level. Note that most prepaid tuition plans are sponsored by the state government and have residency requirements.2

 Don’t Be Surprised by Fees

There are fees and expenses associated with a 529 plan. It’s important to know because they lower returns. Fees and expenses vary by plan – we can help you find the one that works best for you and your family.

 Financial Eligibility

It’s important to note that your investment in a 529 plan will generally impact your student’s eligibility for need-based aid. Just remember, the more you can save for school, the less debt your student may have to incur.

 1 https://www.savingforcollege.com/intro-to-529s/what-is-a-529-plan

2 https://www.sec.gov/about/reports-publications/investor-publications/introduction-529-plans

Annuities Planning Meeting
07/10/2024

Favorable tax treatment is one of the main reasons for buying an annuity. But what exactly are the tax benefits? And are there any drawbacks? It’s important to know the answers to these questions...

Aging Parents square
Caring for Your Aging Parents
Personal Planning05/15/2024

Caring for your aging parents is something you hope you can handle when the time comes, but it’s the last thing you want to think about. Whether the time is now or somewhere down the road, there are...

New Investors square
Fundamental Concepts for New Investors
Personal Planning05/08/2024

Investing involves setting goals for the future and weighing the risks and potential rewards associated with a wide variety of investment opportunities. If you are a new investor, this might seem...