Expertise in 529 Savings and College Planning 

Investing in a 529 plan through Craig James Financial Services will help provide education security for you and your family. 

In an environment of rising tuition costs for both public and private universities, planning in advance to pay for college is arguably more important now than ever before. Fortunately, investing in a state-sponsored 529 Plan allows you to set aside funds for future college costs. 529 Plans have no income limitations or age restrictions, making them feasible options for most financial profiles.

Advantages of 529 Plans 

First and most notably, 529 Plans provide tax advantages. Investments in 529 Plans (named after Section 529 of the Internal Revenue Code) grow federal and state income tax free. Additionally, contributions of up to $5,000 per year by individual or $10,000 a per year by a married couple to a 529 Plan are deductible in state income tax, adding an extra tax incentive. Because of the tax advantages offered, the 529 Plan is a great way for parents or grandparents to shelter inheritance money from estate taxes and contribute substantial amounts to a student’s college fund.

Secondly, the beneficiary of a 529 Plan is changeable. In the case that the original beneficiary does not use the funds for whatever reason, the accumulated value of the 529 Plan may be transferred to another beneficiary. While there are penalties on withdrawing from a 529 Plan for non-qualified expenses (not education related), this extra degree of freedom alleviates the risks of investing.

Finally, investments in 529 plans are advantageous in a school’s financial aid evaluation. Parental assets past the first $10,000 (not counted to due Asset Protection Allowance) in a 529 plan may reduce a student’s aid package only by a maximum of 5.64% of the asset’s value. For example, consider a 529 Plan of $20,000. A child’s aid package may only be reduced by a maximum of $564, which is significantly outweighed by the tax-free investment gains.

Types of 529 Plans

College Savings Plans

College Savings Plans work like a 401(k) or IRA. Your contributions are invested in mutual funds or other investments. Your account will go up or down in value based on the performance of the particular investments.

Prepaid Tuition Plans

Prepaid Plans allow you pre-pay all or part of the costs of an in-state public college education. They may also be converted for use at private and out-of-state colleges. The Independent 529 Plan is a separate prepaid plan for private colleges.

*Investments in 529 College Plans involve investment risks. Although plans are established and maintained by states, the states do not provide guarantees against investment loss, except in certain very limited cases. As with any investment in a mutual fund, or other equity security, an investment in a 529 College Savings Plan can decrease in value. Furthermore, although the past performance of available investment options in a 529 College Savings plan may be one of several appropriate factors to consider in choosing an investment, such past performance is not necessarily indicative of how a particular investment vehicle will perform in the future.

College Planning Webinars

Interested in learning more? Join one of our upcoming free college planning webinars to learn some tips and secrets.

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Trying to plan for your kids’ college costs? Craig James Financial Services provides solutions that are tailored to your savings and financial profile.  To schedule a complimentary appointment use the calendar below or to learn more about 529 College Savings Plans, call: 631.393.2888