Kathryn is Editor-in-Chief at Savingforcollege.com and is a subject matter expert on 529 plans. Since joining the team in 2014, she has created a variety of content to help families and financial professionals understand the best ways to save for education. She has been quoted in The Wall Street Journal, the New York Times, Fortune and other well-known media outlets.
As a parent, Kathryn practices what she preaches when it comes to saving for college. She has a 529 plan for each of her three children and actively looks for ways to bring down their future college costs.
Which 529 Plan Should California Residents Choose?
California has one 529 college savings plan, ScholarShare 529, which is a highly rated 529 plan with low fees, a variety of investment options, strong historical performance and a matching grant program for residents. There are no specific benefits offered to California residents who use ScholarShare 529.
Is High School Too Late to Start Saving for College in a 529 Plan?
Many families get a late start on saving for college. Parents who open a 529 plan when their child is a high school freshman can still take advantage of the federal (and sometimes state) tax benefits. Any amount saved for college will reduce the child’s future student loan debt.
The truth about scholarships and 529 plans
Scholarships can help fill the gap when a family isn't able to save for their entire college bill, and they can put a coveted, more expensive school within reach. But just because you feel your child has a good shot at winning a scholarship one day doesn't mean you should hold off on saving with a 529. Here's why:
Average 529 plan balance: How do you compare?
The average 529 plan balance has hit a record high. But, this amount may not be sufficient to cover future college expenses. The amount you should have saved for college depends on your child’s age and where they want to go to college. Find out if your college savings are on track.
An Alternative to 529 Plan Superfunding
Superfunding a 529 plan can help jump-start a child’s college savings while sheltering a large amount of assets from the donor’s taxable estate. However, wealthy grandparents may be able to make a larger tax-free gift by using up part of their lifetime gift and estate tax exemption.
Tuition Gift Tax Exclusion
The tuition gift tax exclusion allows grandparents and other individuals to reduce their taxable estate while helping a child a child pay for college. Grandparents do not have to file a gift tax form when money is paid directly to a college, even if the amount exceeds the $15,000 annual exclusion amount.
What you can't pay for with a 529 plan
529 plans are tax-advantaged accounts designed to save for college, but the tax benefits are only available when the funds are used to pay for qualified expenses. But, some distributions are considered non-qualified and may be subject to income tax and a 10 percent penalty on the earnings portion.
529 plan gifts may be deductible on state income tax returns
One of the most effective ways to help a child save for college is by funding a 529 plan. Investments in a 529 plan grow tax-free and will not be taxed when the money is used for college. The gift giver may also qualify for a state income tax deduction for 529 plan contributions, regardless of who owns the account.
Planes de ahorro 529 y matrículas en escuelas privadas
La ley de reforma fiscal del 2017 añadió ciertos beneficios al plan 529 para incluir retiros libres de impuestos para matrículas de escuelas de educación primaria o secundaria privadas, públicas o religiosas. Además, la nueva versión de esta ley permite que las cuentas tradicionales de 529 puedan realizar transacciones a otras cuentas ABLE sin impuestos o penalidades. Esta página incluye toda la información disponible acerca del tema y cualquier otro beneficio reciente de los planes 529: data de 1 de enero de 2018 y será actualizada con regularidad a medida que otros detalles se hagan disponibles.
State tax incentives for employer 529 plan matching
States encourage residents to save for college by offering state income tax breaks, matching grants and scholarships for families who use 529 plans. Some states also drive 529 plan participation through employers by offering a tax incentive for contributions to employee 529 plans.
Don’t Panic: What to Do with College Savings in a Volatile Market
Fearing the end of the longest bull market in history, families may start to panic and make moves detrimental to their college savings. Here are some things to consider before making any changes to your 529 plan investments during a stock market downturn.
How to Use a High-Yield Savings Account to Save for College
In recent years, high-yield savings accounts have become popular due to their convenience and relatively high interest rates compared to traditional savings accounts. But, high-yield savings accounts may not always be the best way to save for college.
How Many 529 Plan Investment Changes Can You Make Per Year?
A 529 plan is an investment account designed to save for college or K-12 tuition. Most 529 plans offer a choice of portfolios made up of mutual funds, ETFs or similar investments. You can select a 529 plan portfolio based on your family’s individual needs, and you can make investment changes twice per year.
Can My Ex-Spouse Spend My Child’s 529 Plan Money?
Unless the divorce decree states otherwise, an ex-spouse who is the 529 plan account owner can legally take a distribution and deplete your child’s college fund. Here are some tips on how you can protect your child’s 529 plan savings in the event of a divorce.
Coverdell ESA Investment Options
Similar to a 529 plan, investments in a Coverdell ESA grow on a tax-deferred basis and can be withdrawn tax-free to pay for qualified education expenses for a designated beneficiary. However, one of the biggest differences between a Coverdell ESA and a 529 plan is the available investment options.
Tuition and Fees Deduction Extended Through 2020
The Tuition and Fees Deduction expired in 2017, but expiration date has been extended to December 31, 2020. Eligible taxpayers may claim the Tuition and Fees Deduction for tax years 2019 and 2020 and they may also claim the deduction retroactively for tax year 2018.
Tuition and Fees Deduction
The Tuition and Fees Deduction allows eligible taxpayers to deduct up to $4,000 from taxable income to help cover higher education costs for themselves, a spouse and dependent children. The Tuition and Fees Deduction expired at the end of 2016 but was renewed for the 2017 tax year.
Reporting 529 Plan Withdrawals on Your Federal Tax Return
When 529 plans are used to pay for qualified expenses there is usually nothing to report anything on your income tax return. Form 1099-Q and Form 1098-T will list the amount of the 529 plan distribution and how much was used to pay for college tuition and fees, but it is up to you to calculate the taxable portion.
Are 529 Plan Assets Subject to Estate Tax or Inheritance Tax?
A 529 plan can be a great way for a grandparent to leave an educational legacy for a grandchild. But, what happens to the 529 plan if the grandparent dies before their grandchild enters college? Are the assets subject to estate tax or inheritance tax at the state or federal level?
Can You Contribute to a Non-Family Member’s 529 Plan?
All 529 plans accept third-party contributions, regardless of who owns the account. That means anyone, including grandparents, aunts, uncles or even friends can help a child save for college. You do not have to be a family member of the beneficiary to contribute to their 529 plan.
10 Groundhog Day Lessons for College Savers
Punxsutawney Phil often misses the mark. The groundhog has made over 120 predictions, yet he’s only been correct 39% of the time. Parents and grandparents also make inaccurate predictions when saving for a child's college education, but unlike Punxsutawney Phil’s forecast, college savings mistakes can be costly.
Florida’s Prepaid Tuition Plan Drops Prices to Lowest in 5 Years
The Florida Prepaid College Board is lowering prices for the state’s prepaid tuition plan by $1.3 billion. Refunds and lower monthly payments are being offered to current customers, as well as lower prices for new customers. The program's enrollment period begins February 1, 2020.
Can You Donate Your 529 Plan to Charity?
You cannot donate leftover 529 plan money to charity, even when it is targeted for scholarship funding. 529 plan distributions made payable to a charitable organization may be considered non-qualified. A 529 plan beneficiary can only be changed to a qualifying member of the current beneficiary’s family.
Can I Do a Partial 529 Plan Rollover?
Families may rollover all or a portion of their college savings from one 529 plan to another 529 plan. One tax-free rollover is permitted per beneficiary in a 12-month period, and funds must be transferred within 60 days. Learn how to complete a partial 529 plan rollover and if there are any tax implications.
State Tax Breaks for 529 Plan Student Loan Repayments
Under the SECURE Act of 2019, families may use a 529 plan to repay student loans and pay for apprenticeship programs. However, not all states conform to the current federal definition of qualified higher education expenses. In some states, distributions used to repay student loans may be considered non-qualified.
Can I Withdraw Contributions from a 529 Plan Without Penalty?
Each 529 plan distribution is made up of an earnings portion and a basis portion. Since 529 plan contributions are made with after-tax dollars, the basis portion of a 529 plan distribution will never be taxed or subject to penalty. However, you may not take a basis-only 529 plan withdrawal.
The Best 529 Plan for Illinois Residents
Illinois residents are eligible for a state income tax deduction if they contribute to an in-state 529 plan. Illinois administers the Bright Start Direct-Sold College Savings Program, the Bright Directions Advisor-Guided College Savings Program, and the College Illinois Prepaid Tuition Program.
Massachusetts Colleges with the Best Return on Investment
Before selecting a college, it’s important to evaluate the costs and benefits of each option. Massachusetts is home to some of the most well-known colleges and universities in the world, but many cost over $20,000 to attend. Here are the 10 colleges with the best ROI, according to PayScale.com.
How Grandparents Can Save for College in Massachusetts
Grandparents who help save for college can reduce a grandchild’s future student loan debt burden while leaving an educational legacy. In Massachusetts, grandparents may be eligible for a state income tax deduction. There are also financial aid and tax considerations for grandparents to be aware of.
A $500 Holiday Gift Can Pay for a Year of College Tuition
According to 2016 data from T. Rowe Price, on average, parents spent $422 on holiday gift per child, with 34% spending $500 or more. But, what if instead of a buying material gifts, parents and grandparents made a contribution to the child’s 529 college savings plan?
Financial Checklist for New Parents in Massachusetts
A Massachusetts parent’s financial responsibilities go beyond just paying for food and diapers. To make the transition into parenthood easier, you’ll want to budget for upcoming child-related expenses and make sure you have the right financial documents in place. Here’s a quick checklist to get you started.
How Much to Save for a Massachusetts College
Although Massachusetts is one of the smallest states in the U.S., it is home to over 80 colleges and universities. The amount parents should save in a 529 plan to send their child to a Massachusetts college depends on their child’s age and the specific college they are saving for.
Which 529 Plan Should Pennsylvania Residents Use?
Pennsylvania offers the Pennsylvania 529 Investment Plan, which is a highly-ranked plan featuring Vanguard mutual funds. However, Pennsylvania offers a state income tax deduction for contributions to any 529 plan, so residents may also consider investing in an out-of-state 529 plan.
Which 529 Plan Should Texas Residents Use?
Texas has two 529 college savings plans, the Texas College Savings Plan and the Lonestar 529 Plan. But, Texas residents are not limited to using an in-state 529 plan. Families should also consider out-of-state 529 plans that have lower fees and better investment performance.
Which 529 Plan Should New York Residents Use?
New Yorkers can choose to invest in almost any 529 plan, but they are eligible for a state income tax deduction if they use an in-state 529 plan. The state of New York administers two 529 college savings plans, New York’s 529 College Savings Program – Direct Plan, and New York’s Advisor-Guided College Savings Plan.
Socially responsible investing with 529 plans
Socially responsible investing (SRI) is a strategy that considers social or environmental factors in addition to financial return. However, families saving for education may have a difficult time finding SRI investment options within 529 plans. You may even find that your plan has exposure to gun manufacturers.
Scariest College Savings Horror Stories and How to Avoid Them
With proper planning, a 529 plan can help you save for your child's future and avoid student loans. But, college savings mistakes can haunt you. We asked a financial attorney to share her most terrifying college savings stories from her clients.
Responsible Investing With 529 Plans
Today’s investors want more from their investments than just solid returns. Socially responsible investing (SRI) and environmental, social and governance (ESG) investing incorporate ethics into the investment process. Ten 529 plans currently offer sustainable portfolios.
Which 529 Plan Should Massachusetts Residents Choose?
Massachusetts has one 529 college savings plan, MEFA’s U. Fund, which is managed by Fidelity Investments and available to residents of any state. Massachusetts residents may invest in almost any state’s 529 plan, but they could be eligible for a state income tax deduction if they use MEFA’s U. Fund.
Can a Non-U.S. Citizen Use a 529 Plan to Save for College?
Parents and grandparents who are non-U.S. citizens may be able to open a 529 college savings plan if they are U.S. taxpayers. Most 529 plans require the account owner to be a U.S. citizen or a resident alien who has a Social Security Number or Tax Identification Number.
Answers to Common Questions About Saving for College
Saving for college is a top priority for many families. But, some parents hesitate to open a 529 plan because they are confused about how they work. Here are answers to 10 common questions about saving for college that can help you plan for your child’s future.
Can You Use a 529 Plan to Pay for Coding Bootcamp?
529 plan funds can be used to pay for a coding bootcamp at an eligible college or university. Distributions used to pay for a course offered through a private compare are non-qualified. Other ways to pay for coding bootcamp include scholarships, student loans, income share agreements and deferred tuition plans.
Calculating How Much Clients Can Afford for College
Learn how to help your clients determine how much they can afford to pay for college. This involves using all available resources, including 529 plans and financial aid, and keeping student loans to a minimum. These four questions will help you start the discussion.
How to Grow Your Practice With 529 Plans
As college costs continue to rise, parents and grandparents are seeking help from financial professionals to help with college funding. Helping families with college planning and 529 plans can help you grow your client base and increase assets under management.
Can You Use a 529 Plan to Buy or Rent a Car?
You cannot use a 529 plan to buy or rent a car. Transportation costs, including the costs of purchasing and maintaining a car, are considered non-qualified expenses. Students can save on transportation costs by renting a car, using a rideshare service or riding a bike or electric scooter.
Can You Use a 529 Plan to Pay for Online Classes?
Students may use a 529 plan to pay for online courses offered through at an eligible institution. Taking online courses is a popular way to save money on college tuition. A student can be enrolled full-time or part-time and they do not have to be seeking a degree.
Will I Get a 529 Plan State Tax Break If I Move to Another State?
Whether it’s for a new job or another personal reason, relocating your family to a new state can be overwhelming. As you establish residency in your new state, it’s important to review your state’s rules regarding state income tax benefits for 529 plan contributions.
Major Enhancements to Florida’s 529 Savings Plan
The Florida Prepaid College Board announced new enhancements to the state’s 529 college savings plan. The enhancements are part of the Board’s “Win Florida” vision, which aims to offer reliable 529 plan management, diversified investment options and low fees to Florida families who are saving for college.
Will I Get a State Tax Break If I Use an Out-of-State 529 Plan?
For most families, a 529 plan is the most effective way to save for college. 529 plan investments grow tax-deferred and distributions are tax-free when used to pay for qualified higher education expenses. State income tax benefits may also be available, depending on where you live and which 529 plan you contribute to.
How to Prepare Your Child for College (Ages 16-18)
With college just around the corner, it’s time for your child to finalize the college application and admissions process. Financial aid deadlines and other important dates are quickly approaching. Here are the final steps to focus on as your child prepares for college during their junior and senior year of high school.
How to Prepare Your Child for College (Ages 5-10)
College may be the last thing on your mind as your child begins elementary school, but there are important steps you can take to prepare a young child for college. Focus on growing your 529 college savings plan and having discussions about college affordability.
529 Plans Receive Favorable Treatment on the FAFSA
The impact of a college savings account has on financial aid eligibility depends on the type of account, and who owns the account. 529 plan accounts owned by a parent or dependent student generally have a more favorable impact on financial aid eligibility than other types of investment accounts.
The Pro 529 Evaluator Helps You Stay Compliant with Regulations
Financial professionals who sell 529 plans are required to act in their clients’ best interests and must adhere to the rules of the MSRB. The Pro 529 Evaluator is a tool designed to help financial professionals confidently recommend 529 plans while staying compliant with rules and regulations.
How to Make Sure Your Grandchild’s 529 Plan is Used for College
A 529 plan account owner, not the beneficiary, controls the assets in the 529 plan account and may not use the funds for their intended purpose. Grandparents concerned about contributing to a parent-owned 529 plan may consider opening a 529 plan in their own name or opening a custodial 529 plan for their grandchild.
How to Save for Graduate School
Earning an advanced degree can help boost your career and potentially lead to a higher salary. But, graduate school is expensive, and students who aren’t prepared for the costs end up in serious debt. Learn about how to save for graduate school and ways to cut graduate school costs.
Grow Your Practice with Grandparent 529 Plans
529 plans are an effective tool for clients who want to help pay for a grandchild's college education. But, a grandparent's financial gift may hurt their grandchild’s eligibility for need-based financial aid. Here are some important points to cover when discussing 529 plans and college funding with your clients.
Using Your State Income Tax Refund to Save for More College
Seventeen states allow taxpayers to directly deposit all or a portion of their state income tax refund into a 529 plan. Here are each state's requirements for contributing a state income tax refund directly into a 529 plan. Most states require the taxpayer to provide the 529 plan's account number and routing number.
How to Rollover a Prepaid Tuition Plan to a 529 Savings Plan
Prepaid tuition plans help you save for college and can act as a hedge against college inflation. But, they are more restrictive than 529 college savings plans and may not be the best option for some students. Here are some things to consider before you rollover a prepaid tuition plan to a 529 college savings plan.
College is More Affordable when Families Plan Ahead
More families had a plan to pay for college than last year, according to Sallie Mae’s 12th annual “How America Pays for College” report, 44% compared to 40%. The families who planned ahead had more available options, spent more money on college and were more satisfied with their college decision and how they paid for it.
How to Help a Teen Save for College with 529 Plan Gifting
It’s important to benchmark your college savings progress as your child enters their teenage years. If your savings are coming up short, you may want to consider asking friends and family to make a 529 plan gift contribution. Every dollar contributed to your teen’s 529 plan is one less they will have to borrow.
Earn Cash Back for College this Summer with Upromise
This year, instead of busting your budget, why not earn cash back for college as you enjoy summer fun with your family? Upromise® is a program that helps families save for college by doing the things they do every day, like shopping online or dining at participating restaurants.
Does a Sibling’s 529 Plan Assets Hurt Financial Aid Eligibility?
Assets held in a 529 plan are considered when determining a student’s financial aid eligibility. A sibling’s 529 plan assets may also be considered, depending on whether the 529 plan is a parent-owned 529 plan or a custodial 529 plan, and which college the student attends.
Employer-Paid Tuition Assistance
Employees who receive employer paid tuition assistance can exclude up to $5,250 of the benefit from federal income taxes each year, as long as certain qualifications are met. Tax-free education assistance is intended for the employee, but not their spouse or dependents.
Can You Use a 529 Plan to Pay for Health Insurance?
You cannot use a 529 plan to pay for health insurance, but many colleges require students to have health insurance. College students have the option to stay on their family’s health insurance, enroll in a campus health plan or purchase their own insurance plan.
Investment Time Horizon
Knowing your investment time horizon will help you select the appropriate mix of investments to help you reach your goals. A parent’s investment time horizon for a 529 plan will depend on their child’s age and whether they are using the funds to pay for college or K-12 tuition.
The Best 529 Plan Investments Based on a Child’s Age
Parents should review their 529 plan investment options periodically to make sure they are still on track to meet their goals. With only 18 years from birth to college, your investment objective may change quickly from growth to preserving capital.
How to Open an Advisor-Sold 529 College Savings Plan
Advisor-sold 529 plans are only available through licensed financial advisors who work for a broker-dealer or registered investment advisor. A financial advisor may help a family select and open a 529 plan, create a college savings investment strategy and offer guidance when it is time to pay for college.
New SEC rules require financial advisors to act in investors' best interests
The SEC recently adopted new rules to help protect investors from bad advice, high fees and conflicts of interest when buying investment products from financial advisors. Under the new rules, financial advisors who earn commissions (brokers) will be held to a higher standard of conduct.
Dual Enrollment vs. AP Classes
Dual enrollment and Advanced Placement (AP) classes both offer an opportunity for high school students to earn college credit while in high school. However, there are some key differences between AP and dual enrollment classes, such as how college credit is earned and the availability and costs of classes.
Which College Expenses Qualify for Education Tax Benefits?
The federal government offers a number of tax incentives to help offset college costs. Tuition and fees always count as a qualified expense for these tax incentives, but other expenses, such as room and board and transportation, may or may not be covered depending on the education tax benefit.
Should I Pay Off My Mortgage Early or Save for College?
Instead of saving for college in a 529 plan, some families pay off their mortgage early to free up future cash flow. Families should consider their mortgage interest rate, the liquidity of their assets and whether or not they plan to stay in their home before deciding to pay off their mortgage early.
Can You Rollover Funds from a 529 Plan to a Coverdell ESA?
You cannot rollover funds from a 529 Plan to a Coverdell Education Savings Account (ESA). However, Coverdell ESAs allow tax-free outbound rollovers to other Coverdell ESAs and to 529 plans with the same beneficiary or a beneficiary who is a family member of the current beneficiary.
18 States Offer FDIC-Insured 529 Plan Options
18 states offer 529 plan options that are insured by the Federal Deposit Insurance Corporation (FDIC), including high yield savings accounts and bank certificates of deposit (CDs). FDIC-insured investments are suitable for families who want to preserve capital in their 529 plan without taking on excess risk.
When to consider a Coverdell ESA to 529 plan rollover
Up until recently, the Coverdell ESA was the only tax-advantaged account designed to save for K-12 expenses. But the signing of the Tax Cuts and Jobs Act in 2017 expanded the definition of 529 plan qualified expenses to include $10,000 per year in K-12 tuition, so families might be contemplating a rollover.
Automatic Investing in a 529 Plan
Automatic investing in a 529 plan is a proven strategy to help families save more for college. Families who have to remember to make a 529 plan contribution each month are likely to forget and miss out on potential tax-free earnings growth. Investors will also benefit from dollar-cost averaging.
Who is a Member of the Family of a 529 Plan Beneficiary?
A 529 plan account owner may change the beneficiary at any time without tax consequences when the new beneficiary is a family member of the current beneficiary. The IRS provides a broad definition of family member, which includes the beneficiary’s blood relatives and relatives by marriage and adoption.
When You Should Not Change Your 529 Plan Beneficiary
529 plans offer the flexibility to change the beneficiary without tax consequences. However, in some cases changing the beneficiary is not necessary to maximize tax consequences. Here are situations when you should consider keeping your current 529 plan beneficiary.
Why You Should Change Your 529 Plan Beneficiary
A 529 plan beneficiary can be changed to a qualifying member of the family member of the current beneficiary at any time. This flexibility may help families avoid paying taxes and penalties on unused 529 plan funds and can be used as a strategy to avoid limitations around 529 plan rollovers and investment options.
Bill Moves Forward to Allow 529 Plans to Repay Student Loans
The House Ways and Means Committee unanimously passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which aims to improve savings habits in the United States. The legislation proposes expanding the benefits of 529 plans, including adding student loan repayments as a qualified expense.
Can You Use a 529 Plan to Pay for Trade School?
529 plans can be used to pay for postsecondary education at any eligible institution, including trade schools. Trade school programs typically take less than two years to complete, and cost significantly less than a bachelor's degree from a 4-year college.
How to Fill a College Savings Gap
Even after years of saving in a 529 plan, many parents come up short when it’s time to pay for college. It may be tempting to dip into retirement savings or take out an excessive amount of student loans to fill the gap but doing so may put your (or your child’s) future financial security at risk.
American Opportunity Tax Credit (AOTC)
The American Opportunity Tax Credit (AOTC) allows eligible parents and dependent students to claim a $2,500 annual tax credit per student to help cover college costs. Eligible families may use a 529 plan to pay for expenses that were not counted toward the AOTC.
The Best Tools to Help You Save for College
College is a major expense for most families. 529 plans are designed to help save for college, but many parents are confused about how they work. Fortunately, there are several tools available that help with selecting and opening a 529 plan, scheduling contributions and inviting friends and family to contribute.
College Savings Tips for Working Parents
The cost of raising a child from birth to age 17 has risen to $233,610, not including college savings. Even households with two working parents may struggle to find room in their budget for 529 plan contributions. But, there are ways working parents can take advantage of their additional income to fund a 529 plan.
States that Do Not Conform with Federal 529 Plan Tax Laws
Federal tax benefits of 529 plans include tax-deferred investment growth, tax-free distributions for qualified education expenses and tax-free 529 plan rollovers. However, some states do not fully conform with the federal laws regarding qualified tuition programs.
How to Save More for College
Many parents have trouble saving money for college. After day-to-day expenses and competing financial priorities, it may seem like there is little leftover to fund a 529 plan. But, in some cases what seems like a monetary problem is actually a psychological problem that can be fixed by changing your habits.
How Does Your State’s 529 Plan Income Tax Benefit Work?
Taxpayers in over 30 states may claim a state income tax deduction or tax credit for contributions to a 529 plan. However, each state has its own rules regarding the type of tax benefit, and the amount of 529 plan contributions eligible for a state tax deduction or credit each year.
Don't Count on Using a 529 Plan for State Tax Breaks on K-12 Tuition
The definition of qualified higher education expenses now includes tuition at K-12 schools. However, in some states, 529 plan distributions used to pay for K-12 tuition may be taxable at the state level, and any state income tax benefits claimed may be subject to recapture.
My Child Turned 18. Can I Still Claim a 529 State Tax Benefit?
Families who contribute to a 529 plan may be eligible for a state income tax deduction or credit, depending on where they live. A state income tax benefit may be claimed each year contributions are made, including before, during and after the beneficiary attends college.
Are 529 Plan Contributions Tax Deductible When Used for K-12?
Contributions to a 529 plan are made with after-tax dollars, and therefore are not tax deductible at the federal level. However, some families using a 529 plan to pay for K-12 tuition may qualify for a state income tax deduction or tax credit for 529 plan contributions.
Using a 529 plan to pay for K-12? These states offer tax benefits.
The Tax Cuts and Jobs Act expanded the definition of 529 plan qualified expenses to include up to $10,000 per year in K-12 tuition. Twenty-one states have conformed to the new tax law, and offer a state tax deduction or credit for 529 plan contributions when the funds are used to pay for K-12 tuition.
Student Loan Debt Hinders Retirement Plans for Baby Boomers
Baby Boomers are the fastest-growing category of student loan debtors. Over half of 54- to 60-year-olds say college debt is preventing them from meeting financial goals, including retirement. Baby Boomers with student loan debt may consider refinancing their loans or exploring employer loan repayment assistance.
More Americans Give the Gift of College, Setting 529 Plan Records
529 plans reported double-digit increases in gift contributions during the 2018 holiday season. This could be a sign that grandparents and other loved ones are becoming more comfortable with giving the gift of college. Parents may also be taking advantage of online tools and 529 plan registries..
Can a 529 Plan Be Used to Pay for Summer Camp?
You cannot use a 529 plan to pay for summer camp costs. Summer camp expenses can add up, but there are ways families can bring costs down. For college students, 529 plans can be used to pay for study abroad and other summer programs offered through an eligible college or university.
FINRA Gives Firms Until April 1 to Self-Report 529 Plan Share Class Violations
FINRA’s new 529 Plan Share Class Initiative allows firms to self-report any issues with 529 plan share class recommendations and supervision by April 1 to avoid fines. FINRA hopes the initiative will help to remedy potential violations and return money to affected investors as quickly and effectively as possible.
Using a 529 Plan to Pay for Continuing Education
Adults returning to college can use a 529 plan to pay for continuing education, undergraduate courses or graduate courses offered at an eligible college or university. Residents of some states are eligible for a state income tax deduction or credit for 529 plan contributions.
Remember John Bogle's Advice When Saving for College
John C. Bogle, founder of the Vanguard Group, has died at age 89. Bogle was known as the father of index investing, a low-cost, passive strategy that aims to match returns of a broad market index, such as the S&P 500 Index. Many 529 plans offer Vanguard index funds as underlying investments.
How to Freeze a Child's Credit
Credit Bureaus now offer free credit freezes for adults and children under 16. Freezing a child’s credit helps protects them from identity theft, including financial aid fraud. Children are an easy target for identity thieves, since it can take years to discover that their identity has been compromised or stolen.
States are Beginning to Offer 529 Plan Investment Options for K-12
Louisiana and Kentucky are the first states to offer 529 plan investment options specifically designed to help families save and pay for K-12 tuition. Louisiana launched the START K12 Program, a separate 529 plan for K-12, and Kentucky will offer new investment options based on college or K-12 enrollment dates.
How to Save for College When You're Living Paycheck to Paycheck
With little or nothing left over after meeting financial obligations each month, saving for college might seem impossible. But, even a small amount invested wisely in a 529 plan can make a big difference when your child is ready for college. Here are some ways even families on a tight budget can build college savings.
Emotional Investing Mistakes to Avoid When Saving for College
Saving for a child’s college education can be an emotional journey for parents and grandparents. But, making emotional investment decisions with your college savings can have negative consequences that will keep you from reaching your goals.
New Year’s College Savings Resolutions
New year’s resolutions often include financial goals such as paying down debt and saving money for retirement. Parents who are saving for college should also use this time to review and improve their college savings strategy. Here are nine college savings resolutions to get you on the right track for the year ahead.
NextGen 529 – Client Direct Series: 529 plan review
The NextGen 529 Client Direct Series is a direct-sold 529 plan available nationwide. Investors can select from BlackRock mutual funds and iShares exchange traded funds (ETFs). The plan is administered by the Finance Authority of Maine, which offers matching grants for eligible Maine residents.
Should you switch 529 plans if you move to another state?
Families who are moving to another state may consider switching 529 plans to maximize state income tax benefits. Federal tax law allows one tax-free 529 plan rollover per 12-month period. However, each state has its own rules regarding eligibility for income tax benefits and tax treatment of 529 plan rollovers.
How to open a direct-sold 529 plan
Families saving for college can enroll in a direct-sold 529 plan by completing a form on the 529 plan’s website. Direct-sold 529 plans are convenient and generally offer low fees, but the account owner is responsible for selecting and monitoring the 529 plan’s underlying investments.
529 plans that offer ETFs
After a 529 plan is opened, the next step is to select an investment portfolio that will help maximize college savings. Parents may want to consider a 529 plan portfolio that contains exchange-traded funds (ETFs). ETFs can be a low-cost way of investing in a total stock market or index portfolio.
Should you have a separate 529 plan to save for K-12?
Families can now use a 529 plan to save and pay for up to $10,000 (per year, per beneficiary) in tuition expenses at K-12 schools. If you're thinking of using a 529 plan to save for K-12 tuition, you should consider keeping your K-12 savings separate from your college savings plan.
Is it ever too late to start saving for college?
Ideally, parents should start saving for college as soon as their child is born (or earlier). But, even if your child is in high school there is still time to take advantage of 529 plan benefits and reduce the amount they will have to borrow in student loans.
With Upromise, you can earn money for college every time you travel
Looking for ways to boost college savings? Families can earn rewards of 7% cash back or more by booking travel plans through the Upromise shopping portal. Earned college dollars can be automatically transferred to a linked 529 plan account.
How much do you really save by going to community college?
A popular strategy to reduce college costs is to start out at a community college and eventually transfer and graduate from a 4-year college. But, transferring colleges isn’t always a smooth process, and could end up costing you more than you expect.
Want to retire early? Don’t forget to save for college.
The FIRE movement focuses on cutting spending and aggressively saving enough money to gain financial independence and retire early. But, followers of FIRE are not always considering future college costs, putting their children at risk for high student loan balances.
529 plans save families billions of dollars in federal income tax
529 plans experienced record growth over the past decade. The number of 529 plan accounts, total assets in 529 plans and 529 plan account balances have hit all-time highs. A study from Pew Research reports a 25 percent increase in 529 plan federal tax savings from 2017-2017, and a similar boost in state tax savings.
Psst! Want to save $1,200 for college? Join Upromise.
Upromise is a loyalty program that rewards members for making purchases online, dining at restaurants or using the Upromise Mastercard. Rewards available through Upromise may seem small at first, but when deposited into a 529 plan they have the potential to grow into a significant amount to help pay for college.
Upromise revamps college savings program
Upromise, a program that allows members to earn money for college through everyday purchases, recently added new features and tools to simplify the college savings process. Upromise earnings can now be swept directly into any 529 plan, checking or savings account.
Parents turn to financial advisors for help with college savings
According to a new study from Fidelity, 64 percent of families said their financial advisor keeps them on track to meet college savings goals. Families who have a financial advisor are also more confident about their plan to save for college.
Parents view college as a valuable investment, yet few plan ahead
Despite rising tuition costs, most families still believe college is a worthwhile investment. Yet when it comes to how they’ll pay for college, only 40 percent of families have a plan in place before the student enrolls, according to Sallie Mae’s How America Values College 2018 report.
Top 10 ways to maximize 529 plan benefits
Enrolling in a 529 plan is an important step toward saving for a child’s college education. But, are you taking advantage of all that a 529 plan has to offer? Here are 10 things you can do to maximize the value of your 529 plan and get closer to meeting your college savings goals.
10 easy ways grandparents can help pay for college
Many grandparents want to leave an educational legacy by helping fund a grandchild's college education. Grandparents recognize the value of education, and want to see their children graduate without excessive student loan debt. Learn about 10 different ways a grandparent can help pay for college, and the pros and cons of each.
New starting salary data can help parents set college savings goals
New data from the National Association of Colleges and Employers (NACE) shows average starting salaries of students who graduated with a bachelor’s degree in 2017 are up slightly from the previous year. These figures can help parents determine how much they need to save for their child’s future college education.
Tax reform 2.0 would allow parents to pay off student loans with 529 plans
House Republicans released an outline of “tax reform 2.0”, which builds on the Tax Cuts and Jobs Act signed by President Trump in 2017. It includes provisions that would allow tax-free withdrawals from 529 plans to pay for home schooling costs, apprenticeship fees and student loan payments.
How to transfer 529 plan funds to a sibling
Parents can transfer 529 plan savings from one child to another without tax consequences by doing a plan-to-plan rollover or a beneficiary change. But in order to ensure a smooth transition of 529 plan money between siblings, there are some important factors to consider.
Parents can use a 529 plan to pay for K-12, but most won't
Savingforcollege.com recently surveyed over 1200 parents to gain insight on how they use 529 savings plans and prepare their children for college. Most parents will not use a 529 plan to pay for K-12 tuition, but many will involve their children in enrichment activities such as sports, volunteering and summer jobs.
Should college applicants be concerned about their social media profiles?
Colleges may look beyond a prospective student’s application during their evaluation process. According to a recent survey from Kaplan Test Prep, 68% of college admissions officers consider social media profiles like Facebook, Twitter and Instagram “fair game” when it comes to learning more about an applicant.
Parents regret not saving more for college
Most parents believe saving for college is a top priority, but many regret not saving more, according to a survey from Student Loan Hero. Learn how a 529 plan can help grow your savings and reduce the amount your child will have to borrow to pay for college.
How to save for college and still get financial aid
There are countless reasons why families should save for college, yet some parents fear that having money set aside will hurt their child's chances of getting financial aid. But the reality is, you may still qualify for need-based financial aid even if your child has a college fund.
Should you open an ABLE account for a child with a disability?
Individuals who are living with a disability have little incentive to plan for the future. Having even a modest amount in savings or assets can jeopardize eligibility to receive public benefits like Medicaid and Supplemental Security Income (SSI). That is, unless the funds are held in a 529 ABLE account.
10 financial aid myths: What you don't know can cost you
Many families need help paying for college, but they are confused about how the financial aid process works and sometimes end up leaving money on the table. Here are 10 common costly myths about financial aid and the FAFSA and the truths behind them.
The 25 most popular 529 plans
529 plans are one of the most popular ways for families to save for college. But with close to 100 different plans to choose from, finding the best 529 plan for your child can be challenging. To help you with your decision, we've put together this of 25 of the most popular 529 plans on Savingforcollege.com.
529 funding strategies for K-12 private school tuition
Help clients take advantage of new potential tax savings by developing an effective 529 funding strategy for K-12 private school tuition costs. With a relatively shorter time horizon and $10,000 annual withdrawal limits, a new calculator is recommended when paying for private elementary and high school expenses.