Affiliate Upromise
Worried About Paying for College? A 529 Plan Can Help
Saving for a child’s college education ranks right up there with paying off your mortgage and saving for retirement in terms of major money concerns. It can be especially hard for the sandwich generation–those not only having to paying for college but helping out their elderly parents.
But there are ways to make saving for college less painful, including the Indiana College Advisor 529 Plan. Operating much like a 401K retirement plan, you get tax-deferred growth, generous contribution limits, a range of investment options, and professional management of the funds.
An account can be opened for as little as $25.00. The only requirement is that you are over the age of 18 and have a social security number and a permanent street address. Parents, aunts, uncles, grandparents, godparents—anyone–can open an account for a beneficiary and others can contribute to it. The total amount per beneficiary cannot exceed $298,770.
A beneficiary can be anyone you choose, including yourself. The student can use the money to attend college anywhere, even overseas, as long as the institution is eligible to participate in U.S. Department of Education student financial aid programs. If the beneficiary decides not to attend college, you can name another qualified member of the same family as beneficiary.
Two affiliated programs help you increase the account balance. You can invite friends and family to contribute through Ugifts. Upromise is a rewards program, in which you earn money by shopping at certain stores or buying certain products.
There may be some impact on eligibility for federal financial aid when using a 529 plan, but there is no impact on state financial aid. If the money in the plan is not used for qualified higher
education purposes, the earnings are subject to federal and state income tax and a 10 percent federal penalty, with some exceptions. As an Indiana taxpayer, however, you can get a 20 percent income tax credit for contributions to a College Choice Advisor Account–up to $1,000 per year. This tax credit does not apply, however, to rollovers from other states’ programs or from the Upromise program.
The plan is only offered though financial advisors, so contact yours who can help with the enrollment process, guide you through the various investment strategies, qualified expenses, tax consequences, and show you how the 529 fits into your overall financial plan.
About the Author
Our firm is dedicated to providing you with quality estate planning resources, so you can become familiar with all of the existing options. When you visit or call our office, we want you to feel comfortable discussing such an important issue concerning both you and your family. We want to arm you with the information you need to make an informed decision about your family’s future. Paul Kraft is co-founder and administrative principal of Frank & Kraft, P.C., one of the leading law firms in Indiana in the area of estate planning as well as business, tax and financial planning. For more information on 529 plan and other estate planning services, visit our website.
