By Staff Writer
Wednesday, September 11, 2019
Whether you’re a parent or you yourself are looking to obtain a degree it's easy to get sticker shock from reviewing education costs. With a price tag that's constantly rising, it may seem impossible to pay upfront or even someday pay off financial aid loans. Future students should apply for scholarships, grants and even consider schools with lower tuition fees. But two things ring true in nearly every situation - it's never too early or too late to start, and a dollar saved now is better than one borrowed later. With this, I want to bring light to the beauty of Indiana’s 529 Plans, which might just be your best friend in paying for higher education.
Named for Section 529 of the federal tax code, 529 Plans are to post-high school education as 401(k)s and similar options are to retirement.
Earnings on 529 investments are tax-deferred, and become tax-free when used to pay for qualified higher education expenses.
Indiana offers one of the most generous up-front tax incentives for 529 contributors, Hoosiers can get a 20% credit worth up to $1,000. This credit is available to each taxpayer that contributes, even better, the credit is available to account owners and thirdparty gift contributors, meaning parents, grandparents and others can all pitch in and reap some of the benefits.
529s are also incredibly flexible. Qualified expenses include tuition, room and board, books, fees or computers at any school that's eligible to receive federal financial aid. Whether your child wants to become a doctor or a skilled tradesperson, 529 savings can be used to help them pursue their goals. But one thing to note, is that 529 savings cannot be used to pay off student loans, so it’s better to save up before and take advantage of the tax benefits.
Perhaps most importantly, 529 Plans are affordable and easy to use, with a variety of investment options and strategies to meet savers' needs.
Here in Indiana, the CollegeChoice 529 program consists of three different Plans:
|CollegeChoice Direct||CollegeChoice Advisor||CollegeChoice CD|
|The Direct Plan features quick online account setup and a low minimum contribution of $10. The Year of Enrollment portfolios are set to automatically grow more conservative as a beneficiary gets older.||The Advisor Plan offers access to a wider variety of investment options. As with any financial service involving professional assistance, the Advisor Plan comes with slightly higher fees.||The CD Plan resembles a traditional bank product in that it offers principal protection. Its streamlined lineup of FDIC-insured options includes one-, twoand three-year fixed rate certificates of deposit (CDs) and a savings account.|
All three of these 529 Plans share the same core benefits mentioned above - and all three represent a meaningful investment in a child's future.
The cost of higher education isn't going to suddenly plummet overnight, but when used properly, 529 Plans can help parents and all students prepare for the significant challenge of financing it.
For more information about the CollegeChoice 529 Direct Savings Plan, call 1.866.485.9415 or visit www.collegechoicedirect.com to obtain a Disclosure Booklet, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.
For more information about the CollegeChoice Advisor 529 Savings Plan, contact your financial advisor, call 1.866.485.9413 or visit www.collegechoiceadvisor529.com to obtain a Disclosure Statement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.
For more information about the CollegeChoice CD 529 Savings Plan, call 1.888.913.2885 or visit www.collegechoicecd.com to obtain a Disclosure Statement. The Federal Deposit Insurance Corporation (FDIC) generally insures, with respect to each FDIC-insured institution, deposit accounts that are held in the same right and capacity up to the maximum amount set by federal law, currently $250,000.
Please Note: before you invest, consider whether your or the beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state's qualified tuition program. You should also consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You may also wish to contact directly your home state's 529 college savings plan(s), or any other 529 plan, to learn more about those plans' features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.
The above is adapted from the Indiana MoneyWise e-magazine March 2018 as written by guest author Troy Montigney. Click here to download a PDF version of the full e-magazine.
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