What are the advantages of a 529 college savings plan?

Tax-deferral can have a dramatic affect on the growth of an investment. With a state-sponsored 529 College Savings Plan your contributions can grow tax-deferred (some states allow contributions to be partially or completely deductible) and distributed income tax-free as long as distributions are used for qualified education expenses such as tuition, fees, room and board at higher education institutions.

There is no limit on contributions but some states tend to limit contributions once the plan assets have reached a defined maximum (typically $200,000 - $250,000). Under a special election, you may make contributions of up to $70,000 per beneficiary in a single year without triggering a federal gift tax by accelerating five years' worth of contributions (gifts) as of 2013. Married couples may contribute $140,000 per beneficiary in a single year.*

Assets are professionally managed by fund managers selected by the state. Participants can choose from two to almost 30 mutual fund-type investments. Control of the account remains with the contributor regardless of the age of the beneficiary.

* A $70,000 gift is viewed as an accelerated gift over five years. Any other gifts to the same beneficiary by the contributor within five years may result in a federal gift-tax liability. If the contributor dies within the five-year period, a prorated portion of the contribution may be included in his or her taxable estate for federal estate tax purposes.

Savings and Assumptions
Initial investment amount ($) 
Annual savings amount: ($) 
Number of years contributions are made: 
Before-tax return on savings (%)help
Marginal tax bracket (%)help
Your Email Address
I am currently a member of Delta Community Credit Union
Please email me special offers and promotions. Information collected is for internal purposes only and will never be sold to third parties.
   
Powered By DocuMatix

Powered By DocuMatix

This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. This service shall not infer that the company or its affiliates and email service provider, DocuMatix, LLC, assumes any fiduciary duties. In addition, such service should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results. Use of service is provided without warranty of any kind, either express, implied or statutory, including FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, AND ACCURACY. Use of service is entirely at users own risk and user should seek professional financial and legal advice without reliance on service. Provider and email service provider shall not be liable for any lost profits, lost business, direct or indirect, punitive or consequential damages or damages of any kind arising out of service use. This agreement shall be governed and enforced by Utah law, with courts located in Salt Lake County, Utah the sole and exclusive venue. User agrees to indemnify and hold harmless company, email service provider, and affiliates from any and all liabilities and costs (including attorney fees) for any improper use or violation of these terms.

Powered By DocuMatix