All About 529 Plans
By Jeff Matthews, CFP® CDFA®Senior Financial Advisor There’s a popular notion that says it’s best to start 529 plans while your child is learning their ABCs. Like most financial matters, it’s never too early to start saving and 529 plans may offer significant tax advantages. Here are some items to remember as you plan to save for those little ones with a bright future ahead.
Tax Benefits
One of the major benefits offered through 529 plans is that the money you invest can grow tax-free. When used on qualified education expenses, such as tuition, room and board, technology expenses, required books and supplies, and even certain K-12 education expenses, you may make tax-free withdrawals from the account. View a complete list of
tax-free qualified expenses.
Account Ownership Privileges
When you open a 529 account you must name a beneficiary. However, if you are the account holder, you will always have control over the 529 funds regardless of who is named as the beneficiary of the account. Unlike other custodial accounts where the beneficiary may get access to funds at the age of majority (18 in Ohio), the account holder of a 529 plan maintains ownership. Furthermore, it is easy to change the beneficiary on this account if you have multiple children or grandchildren.
529 Plans by State
Plans are available in every state but you don’t necessarily have to use the plan your state offers. However, you may receive a state tax deduction when you use your state’s plan. For example, Ohio offers a tax benefit for in-state contributions of up to $4,000 per year, per beneficiary.
If you have young kids or grandkids who have been working on their ABCs, it’s time to
get in touch with our team to make sure you have a solid plan to save for their educational expenses. We can help you look at 529 plans and other options to suit your specific needs.
As an advisor and a Certified Financial Planner™ professional with over 15 years of experience, Jeff aims to help improve the financial wellbeing of his clients. He develops a plan to help reach your goals by understanding what is uniquely important to your family and you, such as sending your child to college, reaching your ideal retirement or creating a financial legacy that will live on for generations.
The use of the CDFA® designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Wells Fargo Advisors Financial Network is not a legal or tax advisor.
Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. The Arlington Group Investment Consulting, LLC is a separate entity from WFAFN.