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By Evan Mayhew - May 29, 2019
What’s keeping you from opening a 529 plan account to invest for education? Think there are too many restrictions and high minimum investments? Think again.
College and education decisions are hard enough without worrying about how to pay for it. Don’t let these common myths discourage you from getting started.
Fact: Fact: Most plans have low minimums (or even no minimum). To help families save even more, some plans offer matching grants, rewards programs or gifting services (such as Ugift® ) that let others make gift contributions to your student’s account.
Fact: Unlike other college savings options, the 529 plan account owner controls the account. That means you can change your beneficiary to another eligible “member of the family” (as per plan rules) with no tax penalty.1
Fact: Whether you prefer a one-step or do-it-yourself strategy, 529 plans generally offer several investment types that can meet your needs. The one-step strategy is an age-based option where the investment becomes more conservative as the beneficiary gets closer to college age. The do-it-yourself strategy offers a range of individual portfolios that allow you to create your own investment plan.
Fact: You can use the assets at any eligible school2 around the country and abroad. That includes two- and four-year colleges, graduate schools (including law and medical), vocational/technical schools, and K-12 education.
Fact: You can use your account assets for many higher education expenses, including tuition, fees, and certain room and board costs.
Fact: There are no income limitations for a 529 plan.
Fact: Actually, it’s never too late. Even if your student is in high school or you are planning to enroll in classes soon, you can still take advantage of the tax benefits of a 529 plan. In addition, the more you manage to save now, the less you will have to borrow (and pay back) later.
The availability of tax or other state benefits (such as financial aid, scholarship funds and protection from creditors) may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors. The earnings portion of nonqualified withdrawals is subject to federal and state income taxes and a 10% federal penalty.
Fact: Are you considering career retraining or an advanced degree? There’s no maximum age for a 529 plan. As long as your school is eligible, you can use your 529 plan assets—even if you’re not attending full-time.
The fact is—529 plans are a great way to invest for education. Learn how the benefits of a 529 plan can help make your student’s dreams come true.
1 The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
2 An eligible institution is on that can participate in federal financial aid programs.
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