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What’s Your College Savings Plan?
With college costs consistently rising each year, putting a child through college takes planning and foresight. One option to keep in mind is the 529 College Savings Plan. It facilitates savings for college with attractive combination of benefits including:
Tax Benefits*:
· Assets in 529 savings plans grow tax free from federal and, in almost all cases, state taxes provided you use the withdrawals to pay qualified higher-education expenses.
· Pennsylvania residents are allowed a credit against state taxes for contributions to a 529 plan.
Flexibility:
· You can open a 529 plan for anyone – a child, grandchild, stepchild or even yourself.
· Anyone can contribute to a 529 plan.
· You can typically chose to invest in a variety of investment strategies tailored to your desired risk level.
Control:
· The account owner rather than the beneficiary maintains oversight of account assets and determines the time and amount of distributions.
· The account owner can change the beneficiary without paying a penalty as long as both beneficiaries are in the same family. This is highly convenient if you have more than one child.
Contribution Limits:
· You can contribute up to $14,000 a year ($28,000 for married couples).
· Under a special election, you can also combine multiple years into one contribution of up to $70,000 ($140,000 for married couples) without gift-tax consequences*. This feature may pose an attractive opportunity for those, either parents or grandparents, who have idle monies sitting in lower-yielding bank accounts.
As with any investment, time is the investor’s best friend so the sooner you are able to start a college savings plan, the more you may be able to accumulate to help reduce the potential debt burden your loved one will face once they leave college and enter the working world!
Working with an advisor is a great way to navigate your college planning options. The Univest Investments team is here to help! Contact us at 215-721-2112 or investments@univest.net to learn more.
Securities and insurance products are offered through Univest Investments, Inc., member FINRA/SIPC and a licensed insurance agency. Investment advisory services are offered through Girard Partners, a Univest Wealth Management Firm. These affiliated companies are licensed subsidiaries of Univest Corporation of Pennsylvania. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.
*Univest Investments does not provide tax advice. Please consult a tax advisor regarding your specific situation and state tax laws as they relate to 529 plans.
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