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529 College Funds

A 529 College Savings Plan is an education savings plan operated by a state or educational institution that can help you set aside funds for future college costs. Most states offer a 529 plan that can be used to meet the cost of qualified colleges both in-state and out-of-state.

The 529 plan is a great way for parents or grandparents to shelter inheritance money from estate taxes and contribute substantial amounts to a student’s college fund. A 529 Plan (named after Section 529 of the Internal Revenue Code) provides special tax benefits including both federal and state benefits, simplified tax reporting and flexibility. You can maintain control over your own funds and the amount you can put into a 529 plan is substantial.

In addition, there are no income limitations or age restrictions.

  • Anyone can invest on behalf of your child. Parents, grandparents, aunts, uncles, and friends can all contribute to the account. Contributions can be as low as you like or as high as $370,000 over the life of the account.
  • Change in plans? If a child decides not to attend college, you can switch the account to anotherfamily member, including yourself. You may change the beneficiary as many times as you like to another member of your family, as defined by the IRS.
  • Three options if your child decides not to attend college:
  • Leave the assets invested in the plan for later use
  • Change the beneficiary to another family member
  • Withdraw the assets and pay a 10% additional tax

You control the account, even when the child reaches legal age. As account owner, you retain control over withdrawals for the life of the account. This benefit is not offered by non-529 education savings accounts such as UGMAs and UTMAs, whichtransfer assets when the child reaches legal age.

*Investors should consider the investment objectives, risks, and charges and expenses associated with 529 plans before investing. More information regarding 529 plans is available in the issuer’s official statement. Please read the official statement carefully before investing. Investors should also consider, before investing, whether their home state or the home state of the beneficiary offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Other states may include financial aid, scholarship funds, and protection from creditors.

Call Shelly Dodge at 972/539-0002 today to schedule a complimentary consultation to review your financial goals and discuss the various options for 529 College Savings Plans.

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