§529 College Savings Plans
Open an account with as low as $25!
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With the cost of a
college education continuing to escalate, many investors are taking
advantage of a flexible college savings strategy that allows them to
invest money on a tax-deferred basis.
Named after the section of federal tax code that governs them,
§529
College Savings Plans provide a tax-efficient means that can help meet the
expenses associated with an advanced degree.
Anyone can open an account, at any time, for the benefit of anyone
they wish—a child, grandchild, relative, friend—even themselves!
Control of the assets remains with the contributor, so the accumulated
funds are sure to be used as the sponsor wishes. And, if the beneficiary
chooses to forego college, the account owner may change beneficiaries1
or withdraw2
the assets.
Although the rules vary from state to state, contribution minimums
may be low, while the maximum amount allowed over the life of the
account can be quite sizeable—more than $150,000 per student under many plans. Earnings are treated as tax—deferred until withdrawal. This way,
taxes will not erode your account, allowing more of your savings to work
for you over time. What’s more,
when assets are withdrawn for qualified higher education expenses, the
earnings are federal income tax-free!3
The plan's returns fluctuate based
on the performance of their underlying investments. Most plans offer a
range of portfolios that include equity and fixed income investments.
Funds accumulated within a §529 plan can be used for tuition, fees,
room and board, books, supplies and equipment necessary for enrollment
and other qualified expenses at many accredited U.S. institution
of higher learning.
§529 plans offer significant benefits
for investors seeking to fund a college education:
Convenience and Flexibility
A §529 College Savings Plan account can be opened and funded at any time. The account can be started with an initial lump-sum contribution, (modest or significant) and contributors can make regular or occasional contributions as they please. Anyone (parents, grandparents, friends, even the intended beneficiary) can establish a
§529 account and anyone can contribute to the account once it is opened.
Tax-deferred Treatment4 of Earnings and Tax-free Distributions3
Investment choices
Choose from a selection of professionally managed portfolios offered by a variety of prominent mutual fund companies.
Control of Assets
The account owner retains control of the assets and determines how the investment is used. The beneficiary can be
changed1 or assets can be withdrawn2.
No income limits or restrictions
Anyone, at any income level can establish or contribute to a §529 account.
Generally low minimum investments
Varying contribution limits
Special gift and estate tax treatment5
Account owners can give up to five years of contributions in a single year to each beneficiary without gift tax consequences. Also, contributions are generally excluded from your taxable estate for federal estate tax purposes, provided you are not the beneficiary on the account.1
Start Now!
It’s never too early to start a college savings program.
I can help you set up a §529 plan, and guide you in developing a comprehensive investment strategy designed to help you achieve your financial goals.
1The new beneficiary must be a member of the original beneficiary’s family. The beneficiary cannot be changed to the donor. There may be federal gift or generation skipping transfer tax consequences if the new beneficiary is a member of a lower generation than the original beneficiary.
2Federal income tax on the earnings and a 10% penalty may apply.
3Distributions for qualified education expenses made after December 31, 2001 are federal income tax free. As with all tax-related decisions, consult with your tax advisor.
4Legend Equities Corporation does not render tax or legal advice. Consult your tax advisor or attorney for tax and legal advice specific to your situation.
5Subject to an "add-back rule" in the event of your
death within 5 years.
Section 529 plans offered: Are not FDIC insured, may lose value, are not bank guaranteed.
Favorable state tax treatment may be limited to investments made in a §529 college savings plan offered by the customer's home state. Customers should consult their tax advisor before investing.
Before investing in a §529 Plan, consider its investment objectives, risks, charges and expenses carefully. The official statement, which contains this and other information about the 529 Plan, can be obtained by contacting Legend Equities Corporation. Please read the official statement carefully before you invest or send money.
