Investment Management

College Savings

One of the smartest things we can do for our children is to save for their education. And one of the smartest ways to save for education is through 529 plans. The reason is simple: 529 plans have the same or better tax advantages as other college savings plans but are much more flexible, with higher contribution maximums, multiple donors and fewer restrictions on how the money is used.

Federal Tax Advantages

  • Any growth or earnings in your account is tax-exempt if used for education
  • Withdrawals for qualified educational expenses are free from tax
  • The only tax reporting required is upon withdrawals (Form 1099-Q)
  • The current tax benefits of 529 plans were made permanent by the Pension Protection Act of 2006
  • Tax-deferred growth could allow you to save $22,000 more than a taxable account during the accumulation phase

Anyone Can Contribute—Not Just the Account Owner

  • Parents, grandparents, family members and friends can all invest in a child’s education
  • No income restrictions on owner or donors
  • Residents are not limited to their own state's plan or that of the state the student enrolls in
  • You can set up a plan for yourself if you’re thinking of going back to school
  • All contributions are eligible for estate and gift tax exclusions

Can Be Used for a Wide Range of Educational Expenses

  • Eligible expenses include tuition, fees, books, on- and off-campus room and board, equipment and supplies 
  • Eligible institutions include two- and four-year colleges, technical, vocational and graduate schools in the U.S. (and even some overseas)

Owner Controls Beneficiary Account

  • Unlike other college savings programs, the account owner maintains control of the assets until they are distributed
  • If beneficiary does not go to college, or some money remains unused, the account owner can change the beneficiary (There may be a 10% penalty plus taxes)
  • Account owner can withdraw or transfer funds at any time (Non-Qualified withdrawals are subject to income tax plus a 10% IRS penalty)
  • Money can be removed from the estate without relinquishing control
  • Account can be set up under trust or corporation, or as UGMA/UTMA to reduce taxes on minor and gain favorable tax treatment for financial aid
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