Many financial professionals recommend 529 plans as the best way for most families to save for college.* After new legislation that passed in 2019, 529 plans are more flexible than ever to help you make the most of your investment and your tax-free earnings.

Helping you reach your goals, one investment at a time.

Here are some top advantages of investing your savings in a 529 plan:

  1. No annual contribution limits1: Unlike Coverdell Educations Savings Accounts or Roth IRAs, 529 plans don’t limit how much you can contribute in a calendar year.1
  2. No income limits or age limits: Everyone is eligible to contribute. (Relatives and friends can also gift money to your child’s plan.)
  3. Federal income tax breaks: Your earnings in a 529 plan grow tax-free and are not taxed when you take the money out to pay for qualified education expenses.
  4. State income tax breaks: You can choose to participate in any state’s 529 plan, regardless of where you live — so what kind of state tax break you’ll get is one factor to consider when choosing a plan. More than 30 states offer their residents an income tax deduction or a tax credit for contributions made to one of the state’s 529 plans. Only a few states currently allow a deduction or credit for contributing to another state’s plan – but those that do include Arkansas, Kansas and Missouri.
  5. Flexibility: You can roll over your plan to a different 529 plan if you choose, once per 12-month period. You can change your investment options in your plan up to twice per calendar year. And you can change the beneficiary of the account from one child to another, or to another qualifying relative if you need to.
  6. A wide range of expenses qualify: In addition to college tuition and fees, room and board, books and other expenses, you can now use 529 funds to pay for any type of higher education — including technical schools, trade programs or apprenticeships. Also new since 2019, you can use 529 funds to pay back student loans, up to a $10,000 lifetime limit. And tuition for K-12 schools is eligible, up to $10,000 per year, per beneficiary.

Savingforcollege.com* is an excellent resource on 529 plans and other savings vehicles, as well as student loans. Try their comprehensive tool to help you research and compare 529 plans.*

If you’d like more information about tax-advantaged ways to save, our experienced team at Arvest Wealth Management is here to help.

We are happy to meet and review your overall financial planning needs, at no obligation to you.

 

1 Total maximum contribution limits vary by plan and generally range between $235,000 to $550,000. Additionally, a single taxpayer contributing more than $16,000 per beneficiary in one calendar year, or a married couple contributing more than $32,000, may incur gift tax consequences. Consult a tax professional to understand your specific tax circumstances.

Arvest Wealth Management does not offer tax or legal advice. Please consult a tax or legal professional to understand exactly how tax code and IRS regulations apply to your specific circumstances.

*A third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution. Arvest Bank’s privacy policy and security practices do not apply to the site you are about to enter. Please review the third party’s privacy and security practices.

Sources:
www.savingforcollege.com*
www.forbes.com/sites/markkantrowitz/2020/12/16/the-best-way-to-save-for-college*
www.businessinsider.com/529-plans-by-state*
www.businessinsider.com/personal-finance/529-plans-college-student-loans-technical-school-2020-4*