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Named after the section of the tax code that governs them, 529 College Savings Plans are tax-advantaged savings accounts.
Each state sponsors its own College Savings Plan, and each plan has its own investment options and rules.
A 529 Plan can be used to save for any student's qualified higher education expenses. The student can be
your child, grandchild, family member, non-relative, or even yourself.
With a College Savings Plan, you choose how to invest your money from the options offered by the particular plan.
Investments generally include stock and bond mutual funds as well as age-based portfolios of mutual funds.
Your returns will vary based on the performance of the investments you select. Some plans also provide options
designed to preserve your principal and provide a fixed minimum rate of return.
In general, 529 Plans don't have any income eligibility limitations. Any adult - parents, grandparents,
other relatives and friends - can open an account.
You can use the money in a 529 College Savings Plan for tuition and fees, books and supplies, and certain room and
board expenses at any eligible educational institution. Eligible institutions include almost all accredited colleges,
universities, and vocational schools in the United States.
When you make qualified withdrawals from a 529 Plan, your earnings are free from federal income tax.
Some states also allow state residents to deduct part -or all- of their contribution from state income taxes.
In addition, most states allow residents to exempt earnings from state income taxes. Some plans are open
to residents of all states, but out-of-state contributors may not get the state tax breaks.
Contributions to a 529 Plan qualify for the annual gift tax exclusions. So, if you have significant assets,
you can use a 529 Plan to remove a substantial amount of money from your estate. For example, if you make a lump sum
contribution of up to $55,000 to a 529 Plan in a single year for a child, you can elect to treat the contribution as
if it were in equal payments over a five-year period.
Yes. Each state sets its own lifetime contribution limits per student. Limits vary by plan and typically range from $200,000 to $250,000.
As the owner of a 529 Plan, you generally remain in control of the account. Therefore, you decide who can use the money,
when to make withdrawals, and for what purpose. If your child does not attend the higher education institution,
you may defer the account for later use, or transfer it to another member of your family, which is defined broadly.
You can only change investment options within the same plan once a year. In addition, you only roll over your savings to another
529 Plan free from federal income tax once a year. If you withdraw your savings for nonqualified expenses,
you'll owe federal income tax on the earnings. Plus, you'll incur 10% federal tax penalty on your earnings, unless an exception applies.
* For details on tax issues regarding college savings plans, contact your tax adviser.
Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.
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