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529 Qualified Tuition Plans

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. Your earnings grow income-tax deferred, and the money is also free from federal income tax when it’s used to pay for qualified higher education expenses.

Savings can be used for tuition, books, and other education-related expenses at most accredited two- and four-year colleges and universities, U.S. vocational-technical schools, and eligible foreign institutions. Savings may also be used for tuition expenses at eligible public, private, and religious primary and secondary educational institutions (K-12).

There are no income restrictions to opening a 529 Plan. When it comes to choosing a beneficiary, you can choose anyone of any age, and it can also be the same person who sets up the account. There are numerous benefits of opening a 529 Plan:

  • Although contributions are not deductible, earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for college.
  • In addition to the federal tax savings, over 30 states currently offer a full or partial tax deduction or credit for 529 plan contributions.
  • 529 Plans are very low maintenance and most plans allow you to "set it and forget it" with automatic investments that link to your bank account or payroll deduction plans.
  • There is considerable flexibility when it comes to 529 plans. You can change your investment options twice per year as well as rollover your funds into another 529 plan.

If you are considering opening a 529 Plan, Machen Wealth can help you determine your payments and help you set up your account properly, so you are on the right track towards educational savings. Call us at 916- 526- 2680 and set up a consultation with our wealth advisor Scott Machen.

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If you’re feeling apprehensive about your financial future and need someone to act as a sounding board to bounce ideas off of, contact us to schedule a FIT meeting. (916) 526-2680