Individual College Savings

How can I start preparing for my child’s college education?

The average cost of a single year at a four-year private college is $39,5181 and will likely continue to rise. Although paying for college usually comes from a number of sources, including federal loans, grants, and scholarships, saving as early as possible is more important than ever. One of the most attractive ways to help can be a 529 savings plan.

What is a 529 College Savings Plan?

Created by Section 529 of the Internal Revenue Code, a 529 savings plan is a qualified tuition program designed specifically to save for college. Tax-deferred growth on earnings and federal income-tax-free distributions set 529 savings plans apart from other investment vehicles used to save for college.

How does the plan work?

It’s simple, really. Once you set up the plan, you can deposit money in either lump sums or through systematic contributions made over time. You will select the investment options into which the money is to be invested. You also designates a beneficiary, probably your son or daughter, for whom the funds will be used to pay for qualified higher education expenses. Throughout the life of the account, the you maintain control, choosing when to distribute funds and changing the beneficiary as needed.

Is the 529 plan flexible?

With a 529 savings plan, you have the flexibility to control how the money is used. As the account holder, you can change the beneficiary at any time, control when distributions are made, and maintain control of the assets.

Are there other benefits to a 529 College Savings Plan?

Yes! Accelerated gifting allows you to make five years of contributions at one time-up to $70,000 per beneficiary or $140,000 per beneficiary if married filing jointly-without incurring a federal gift tax, so you can realize the power of tax deferral and investment growth sooner. It also removes significant assets from the donor’s federal taxable estate. And, if the donor is the account holder, he or she does not relinquish control of the money.

Ferruso & Associates can help you get a 529 College Plan started to meet the future educational needs of your family.

Schedule an appointment with Ferruso & Associates today!