If you are a parent, grandparent, or guardian of a child and are interested in planning for their future education, the 529 college savings plan is an excellent investment vehicle.
These plans offer tax-free savings to help pay for college expenses, including tuition, room and board, books and supplies, fees and more.
These plans are a great way to save for your child’s educational future. There are many different plans, but the basic rules and features of each plan are the same.
If you have decided to start saving for your child’s college education, then it is a good idea to start planning now. The purpose of this article is to provide information about 529 college savings plans, and the 529 plans available in each state.
529 college savings plans are one of the best ways to save for college. In most states, they’re offered by both public and private institutions.
What is a 529 plan?
A 529 plan is a tax–advantaged savings plan that offers an investment option that allows you to pay for college with a tax–free savings account.
It is a unique investment vehicle that provides you with the flexibility to use the money in your account to pay for your educational expenses or put it toward other expenses. Many 529 plans also offer target-date funds, which will constantly readjust as the beneficiaries approach college age.
The money invested in your account earns income at the rates indicated on the prospectus from state governments.
However, some may have maintenance charges for your account, which will be charged to you on a quarterly or annually basis. Carefully research your chosen 529 plan to see the full extent of these fees, and know whether or not you can waive them.
What is considered a qualified expense in a 529 plan?
If you are attending a public or private institutions or schools of higher education, you can use the money in your account to pay for college. If you are not yet attending college, you can use the money in your account to pay for K-12 tuition.
You can also use a 529 plan to pay for the student loan repayment, apprenticeship program expenses, and other qualified expenses. Moreover, any additional expenses throughout your education such as room and board, books, supplies, and more are also covered.
So, then, what happens if you withdraw funds from your 529 plan that fall outside these qualified expenses? Well, you would be subjected to penalties, which may include any state or federal income taxes. These non-qualified withdrawals can result in as many as 10% penalties for federal taxes on earnings.
If you qualify for a tax deduction for your growth and tax-free withdrawals for your educational expenses, you are also eligible for tax-deferred growth. It is possible to connect your bank account to your 529 account and set up an automatic investment schedule, so that you can add to your savings in a convenient and systematic way.
Finally, check if the beneficiary’s home state 529 plan offers additional state tax benefits or advantages. This can include scholarship funds, protection from credits, and general financial aid. such as financial aid, scholarship funds, and protection from creditors.
What are the different types of 529 plans?
The two major types of 529 plans are savings plans and prepaid tuition plans.
Purchasing a prepaid tuition plan lets you gain college credits or units, which the beneficiary can use to enroll in an educational institution that is included in the plan. Prepaid tuition plans allow you to prepay college expenses at today’s rates.
Many prepaid tuition plans are backed by state, but the beneficiary would have to be a resident of the state sponsoring this plan. You should also take note of the application period, which may vary each year.
In a 529 college savings plan, on the other hand, you will open an account in which your contributions are invested into stock or bond mutual funds, as well as money market funds.
Qualified expenses covered by a 529 college savings plan include mandatory fees, tuitions, and room and board. It also has a leg up compared to prepaid tuition plans, because it can also cover any other obligatory materials from the beneficiary’s curriculum, such as books and equipment.
College savings plans are not federally insured, however. Therefore, it is important to check if your chosen institution has a valid relationship with the institution you wish to use as your investment manager or advisor.
You can also look for advisor-sold 529 plans, which are backed by trusted and licensed financial advisors.
529 College Savings Plans, by State
Every state has its own 529 college savings plans. This list contains the
529 program’s college savings requirements and program names listed by state.
Alabama: CollegeCounts. No minimum contribution. State benefits for contributors available.
Alaska: UA College Savings Plan. $25 minimum contribution. No state benefits for contributors.
Arizona: AZ Family College Savings Plan. $15 minimum contribution. State benefits for contributors available.
Arkansas: AK 529 GIFT Plan. $10 minimum contribution. State benefits for contributors available.
California: ScholarShare 529. No minimum contribution. No state benefit for contributors.
Colorado: CollegeInvest. $25 minimum contribution. State benefit for contributors available.
Connecticut: (CHET) Connecticut Higher Education Trust. $25 minimum contribution. State benefit for contributors available.
Delaware: Delaware College Investment Plan. No minimum contribution. No state benefit for contributors.
DC: DC College Savings Plan. $25 minimum contribution. State benefit for contributors available.
Florida: Florida 529 Savings Plan. No minimum contribution. No state benefit for contributors.
Georgia: Path2College. $25 minimum contribution. State benefit for contributors available.
Hawaii: HI529. $15 minimum contribution. State benefit for contributors available.
Idaho: IDeal- Idaho College Savings Program. $25 minimum contribution. State benefit for contributors available.
Illinois: Bright Start 529 Plan. No minimum contribution. State benefits for contributors available.
Indiana: CollegeChoice 529. $10 minimum contribution. State benefits for contributors available.
Iowa: College Savings Iowa 529. $25 minimum contribution. State benefit for contributors available.
Kansas: Learning Quest 529 Education Savings Plan. No minimum contribution. State benefit for contributors available.
Kentucky: KY Saves 529. $25 minimum contribution. No state benefit for contributors.
Louisiana: Louisiana’s Student Tuition Assistance & Revenue Trust. $10 minimum contribution. State benefit for contributors available.
Maine: NextGen529. $25 minimum contribution. No state benefit for contributors.
Maryland: Maryland 529. $25 minimum contribution. State benefit for contributors available.
Massachusetts: Mass. 529 College Savings Plan. $15 minimum contribution. State benefit for contributors available.
Michigan: Michigan Education Savings Program. $25 minimum contribution. State benefit for contributors available.
Minnesota: MN Saves. $25 minimum contribution. State benefit for contributors available.
Mississippi: College Savings Mississippi. $25 minimum contribution. State benefit for contributors available.
Missouri: MOST – Missouri 529 Education Plan. No minimum contribution. State benefits for contributors available.
Montana: Achieve Montana. $25 minimum contribution. State benefit for contributors available.
Nebraska: NEST 529 Advisor Plan. $10 minimum contribution. State benefit for contributors available.
Nevada: Nevada College Savings Plans Program. $15 minimum contribution. No state benefit for contributors available.
New Hampshire: UNIQUE College Investing Plan. No minimum contribution. No state benefit for contributors.
New Jersey: NJBEST. $25 minimum contribution. No state benefit for contributors.
New Mexico: The Education Plan. $1 minimum contribution. State benefit for contributors available.
New York: NY’s 529 College Savings Program. No minimum contribution. State benefit for contributors available.
North Carolina: College Foundation of North Carolina. $25 minimum contribution. No state benefit for contributors.
North Dakota: CollegeSAVE. $25 minimum contribution. State benefit for contributors available.
Ohio: Ohio’s 529 College Advantage. $25 minimum contribution. State benefit for contributors available.
Oklahoma: OK 529 College Savings Plan. $25 minimum contribution. State benefit for contributors available.
Oregon: Oregon College Savings Plan. $25 minimum contribution. State benefit for contributors available.
Pennsylvania: PA529. $25 minimum contribution. State benefit for contributors available.
Rhode Island: CollegeBound Saver. No minimum contribution. State benefit for contributors available.
South Carolina: FutureScholar. No minimum contribution. State benefit for contributors available.
South Dakota: CollegeAccess 529. $250 minimum contribution. No state benefit for contributors.
Tennessee: TNStars. $25 minimum contribution. No state benefit for contributors.
Texas: Texas College Savings Plan. $25 minimum contribution. No state benefit for contributors.
Utah: My529.No minimum contribution. State benefit for contributors available.
Vermont: Vermont Higher Education Investment Plan. $25 minimum contribution. State benefit for contributors available.
Virginia: Virginia529. $25 minimum contribution. State benefit for contributors available.
Washington: DreamAhead College Investment Plan. $25 minimum contribution. No state benefit for contributors.
West Virginia: SMART529 WV Direct. No minimum contribution. State benefit for contributors available.
Wisconsin: Edvest. $25 minimum contribution. State benefit for contributors available.
Final Thoughts
And there you have it—the 529 college savings plans, listed by state. For more financial advice, head to our website
HERE.
You can also refer to a tax advisor, or contact a financial aid office of your choice to get expert advice.
Additionally, for details about a specific 529 savings plan, you can go ahead and reach out to the plan provider. They will provide you with a complete brief of their program, including the charges, expenses, investment objectives, and any risks.
Take your time to thoroughly go through all of your options to plan the best educational future for you and your family.
