Happy 529 College Savings Day
May 29th is 529 College Savings Day, a unified push by many states to increase awareness of the tax-advantaged college savings plans known as 529s, and boost interest and participation in their respective programs with various sweepstakes, contests and incentives.
But why have a day dedicated to saving for college? Well, with $1.2 trillion1 of outstanding student loan debt in this country, it is never too early to start a disciplined savings plan. And remember, you should engage your children in any plan you establish. Depending on their age, this may include earmarking a portion of their allowance to go towards their college savings plan, or incentivizing them to get good grades in school by offering bonuses to their plan. Remember, you are not the one going to college, so why should you be the only one making contributions to the plan.
What was the plan I had with my parents? We would split the cost of my college education 50/50, as long as my grades were good. Any scholarships I received applied towards my share. Any course where my final grade was below a C, I had to pay the entire cost of the course. This provided me with an incentive to study, as well as work every summer in support of my education.
You see, the idea of a state-sponsored plan to help families with college expenses was just getting started when I was graduating from high school. Now every state has at least one plan available, possibly more, and some states offer income tax benefits for participation. To find out about the college savings promotions taking place in and around the month of May, check out this link from Savingforcollege.com. And don’t limit your thoughts about college savings to just one day a year.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. Savingforcollege.com is a separate, non-affiliated entity.
About Connections Financial Advisors
Connections Financial Advisors is a comprehensive wealth management firm utilizing an ensemble practice methodology to provide its clients with the highest level of service. The firm offers a broad array of financial services, including retirement planning, tax management, estate planning, risk management, education funding, investment management, employee and executive benefits.
1 The Economist, August 15, 2015
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Level Four Advisory Services, LLC, a registered investment adviser. Connections Financial Advisors and Level Four Wealth Management are separate entities from LPL Financial.
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