529 Plans are a popular vehicle for funding college expenses.  They are easy to set up, have many benefits, and few drawbacks.

529 Plan Drawbacks

The only drawbacks are that 529 Plans can only be funded with cash, not investments, and they affect college financial aid, but only a little bit…much less than if the assets were given directly to your beneficiary.  Unless you’re going to stuff your 8 year old’s mattress, there isn’t a better way to save for college because of the many benefits.

529 Plan Benefits

• Plan assets grow tax deferred and are distributed federal tax free so long as the assets are used to pay approved college expenses.
• Some 529 Plan distributions may be excluded from state income tax; it depends on the state.
• A trust can own a 529 Plan thereby providing asset protection, avoiding probate, preventing court interference, and providing a succession of control.
• You can superfund a 529 Plan, meaning that you can deposit up to $65,000 (or $130,000, if you’re married) into a plan in one year, using that year’s and the next four years’ annual gift tax exclusion.
• Anybody can contribute to a 529 Plan that you set up.  For example, grandparents, aunts and uncles, friends, and parents can all contribute to the same plan to benefit your beneficiary.
• The owner of the plan can be changed at any time without incurring gift or other transfer tax.
• The beneficiary can be changed to a related beneficiary if your beneficiary doesn’t go to college or you change your mind.
• If your beneficiary obtains a scholarship, the assets can be switched to another beneficiary or withdrawn without penalty.
• You can choose from almost any state’s 529 Plan so you can control costs, fees, investments, and tax consequences.
• 529 Plans are low maintenance and don’t take a lot of attention; you can invest based on your beneficiary’s age and your risk tolerance and set up automatic investment payments.
• You don’t need to work through a financial advisor to open a 529 Plan, unless you want to.

If you have questions about college expenses and 529 Plans, consult with a qualified estate planning attorney.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

At first, it may sound odd for an Iowa resident to consider investing in a West Virginia 529 Plan.  But, we’ve investigated college saving and investment plans and the West Virginia SMART 529 Select Plan is a winner, even for out of state residents.

The primary attraction is the portfolio construction.  It uses low fee and low turnover (stock trading) institutional funds to create global diversification that has asset allocation to reduce risk but capture market rates of return.  This passive investing technique is preferred over many of the retail mutual funds that use stock picking or market timing which have been shown to add risk and reduce returns in portfolios.

Many 529 plan use only fixed rate or bonds  that will not capture all the market reruns.  As a  result these 529 plans will not keep up with the rising cost of education and this erosion of purchasing power should be an important consideration when funding future educational plans.  Market risk is reduced by broad diversification in the West Virginia plan.

Check out the plan highlights below.

West Virginia SMART 529 Plan Highlights

• This plan is a savings plan (not a prepaid tuition plan)
• This plan accepts contributions until all account balances in West Virginia’s 529 plans for the same beneficiary reach $265,620.
• You can enroll directly with the program.  In other words, you don’t need a financial advisor to open and invest in this plan.
• There is no enrollment fee.
• The $25 annual maintenance fee is waived if you enroll in the automatic investment plan, have a balance of at least $25,000, or are a West Virginia resident.
• The investment expenses range from 0.67% – 0.78% total.
• There is no state residency requirement.  In other words, you don’t need to reside in West Virginia to participate in this plan.
• The minimum contribution requirements are reasonable.  If you just want to contribute periodically, you need a lump sum of $250 for the first contribution.   After that only $25 is required per contribution.

If you set up an automatic investment plan and have contributions taken out of your bank account on a regular basis, the minimum contribution is $25.

• You get to choose among age based and static investment portfolios.

529 Plan Benefits

• All investments grow federal income tax deferred and are distributed tax free when used for qualified educational expenses.
• You can super fund a 529 Plan for children, grandchildren, or any loved one without paying gift tax or using your unified credit exemption.  This means that you can put five years with annual gifts into an account all at once ($13,000 x 5 = $65,000)

Click here to get to www.saving for college.com to compare various 529 plans.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

If you’re an Iowa resident looking to begin saving for your child’s college expenses, contributing to a college savings plan can be a great option.  This makes it easy to save, no matter how old your child is.  If you’re looking for more information on your college savings plan options, read the information below.  If you have any questions about contributing to a college savings plan, meet with an estate planning attorney.

This is a two-part blog post that discusses Iowa college savings plans.  This first post will explain the College Savings Iowa 529 Plan.

What is the College Savings Iowa 529 Plan?

This plan makes it easier for Iowa residents and non-residents to take advantage of the opportunity to save for college expenses.  This plan makes it possible to save for anyone, even yourself!

Many people use this plan to save for their children and or grandchildren.  You’re able to contribute as little as $25 at a time.  There are also many convenient ways to make your contributions.  With this plan, you’re able to continue contributing until the account reaches a maximum of $320,000.  There are also many different investment options to fit your individual needs.

What are some of the benefits of the College Savings Iowa 529 Plan?

This college savings plan offers many benefits.  For one, it’s free to enroll and the fees are extremely low.  You’re also able to access your account online, whenever needed.

Additionally, there are many tax benefits to this plan.  Your assets will grow tax-deferred as you continue to invest.  You’re also able to withdrawal your account funds tax-free for education related purposes.

Another benefit is the ability to deduct some of your contributions from your state tax return.

If you’re looking to save money for your child or a loved one’s college expenses, you will want to consider an Iowa college savings plan.  If you have any questions about a specific college savings plan, consult with a qualified estate planning attorney.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

If you’re an Iowa parent, you may be thinking about contributing to an Iowa college savings plan in order to help fund the costs of your child’s college education.  This can be a great way to build up an investment over time so that your child is able to follow his or her educational goals.  Take a look at some of the information below to learn more.  If you have any questions about the use of college savings plans, meet with an attorney to discuss your specific needs.

This blog post discusses the Iowa Advisor 529 Plan.

What is the Iowa Advisor 529 Plan?

This is a plan that makes it possible to save for your child’s education.  An initial contribution of $50 must be made, and $50 a month or $150 a quarter must be contributed continuously. There is no income limit in place, so you’re able to take advantage of this plan no matter what.  You’re in full control of the account and are also able to change beneficiaries, if needed.   You’re able to continue contributing until the account reaches a maximum of $320,000.

What are some of the benefits of the Iowa Advisor 529 Plan?

There are many benefits to this plan.  This plan makes it easy for anyone to contribute to your child’s future investment, including friends and relatives.

The account also has a low maintenance fee.  Additionally, there are many tax benefits to this plan option.  Your earnings will be both federally and state tax deferred.

All of your education related expense withdrawals are free of state and federal taxes.  You can also can take a deduction from your state tax return, based on the contributions that you’ve made.

If you’re looking to save for your child’s education, now is the time to get started.  If you have any questions about your college savings plan options, consult with a qualified estate planning attorney.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.