A new legacy of education begins with you. We’re here to help you get started.
Giving the gift of education – whether its for a child, grandchild, family friend or even yourself – can have a lasting impact, perhaps for generations to come.
While covering the cost of tuition, fees, books, supplies and equipment can seem overwhelming, with consistent investing, sound financial advice and a 529 plan, funding higher education is an achievable goal. Plus, by working closely with your financial advisor tapping into a 529’s tax-free growth opportunities, estate planning incentives and state tax deductions is easier than ever.
What is a 529 plan?
A 529 plan is a popular savings vehicle that can be established for anyone, but is most often used by parents and grandparents interested in providing education funding. In addition, a 529 plan can provide an easy wealth transfer and may work well for those wanting to reduce their estate.
Tax-Deferred Savings and Tax-Free Withdrawals
All 529’s provide tax-deferred savings and tax-free withdrawal of funds used for higher education. In essence, 529’s are similar to Roth IRA’s but have much higher contribution limits, no income limits and a low impact on financial aid eligibility. Like Roth IRA’s 529 saving plans allow for tax- and penalty-free withdrawals of principal at any time and for any purpose. The earnings portion, however, must be spent toward qualified higher education expenses. Any leftover funds withdrawn will incur income tax and a 10% penalty.
Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. Investors should consider before investing, whether their home states offer state tax or other benefits only available for investments in their home state's 529 plans. 529 plans offered outside their resident state may not provide the same tax benefits as those offered within their state. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.