Focal Point Financial: 529 Savings Plans

The cost of higher education seems to be rising faster than ever, and parents are concerned about how they can help pay for their children’s college education. The 529 Plan may be one answer. 529 Plans are investment plans under the umbrella of each individual state that allows the participant’s earnings to grow tax-deferred. When a withdrawal is taken to pay for the beneficiary’s qualified education expenses, these withdrawals are currently tax-free.

Here are some important plan features:

The person opening the account is the owner. They can name a successor owner. The child/student is the beneficiary. Others can contribute to this account.

The owner controls the account and can change the beneficiary to another child, themselves or their spouse, a grandchild or first cousin of the named beneficiary for post-secondary educational purposes.

Contributions are made with after-tax dollars.

Annual contributions of up to $12,000* may be made to any one beneficiary tax-free; $24,000* for a married couple filing jointly. Lesser amounts may also be contributed.

Up to $60,000* ($120,000* married filing jointly), may be contributed in the first year of a five-year period. No further contributions may be made to this one beneficiary by the same person(s) for five years.

Donations to a 529 Plan are outside of the donor’s taxable estate. Money placed in a 529 Plan does not go through probate. It is not included in the donor’s assets.

More than one 529 Plan account may be opened for the same beneficiary.

Qualified educational purposes are broadly defined, and include two-year junior colleges, trade schools, graduate degree programs, and self-enrichment classes.

There is a 10% penalty, plus taxes, for earningswithdrawn and used for non-education related expenses.

Investments are made in portfolios chosen to reflect the time horizon before the money is needed and the risk tolerance of the account owner. For a more detailed explanation, please give us a call, or come in and let’s visit.

Before buying a 529 plan, you should find out about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee saving are available depends on your state of residence. For information concerning 529 plans, including information comparing the performance of different state’s 529 plans, please contact us.

*Annual maximums adjusted periodically by Congress.

Our clients are our business.

Focal Point Financial Services
2214-5th St., Suite 1
White Bear Lake, MN, 55110
(651) 426-7375 or 1-888-426-7373
Fax (651) 426-6004

dale@focalpointfinancial.com

NOTE: Dale Hedstrand is a registered principal associated with AIG Financial Advisors, Inc., Member NASD/SIPC. Before proceeding further, please be advised that Dale Hedstrand is licensed to discuss with or offer investment and financial services and products only to residents of AL, AZ, CA, FL, ID, MD, MI, MN, MO, NH, NM, ND, OH, OK, OR, SC, SD, TX, UT, VA, WA, WI, WY. Securities related services may not be provided to individuals residing in any state not listed above. The information offered is for informative purposes only. None of this information is to be construed as an offer to buy or sell securities referred to within or otherwise. Neither Dale Hedstrand nor AIG Financial Advisors, Inc makes any guarantee as to the accuracy or completeness of this information.

This information has been prepared from sources and data believed to be reliable but is not guaranteed by NASD/SIPC or AIG Financial Advisors, Inc., nor is any representation made herein as to its accuracy or completeness. This listing is provided for information purposes only and is not to be construed as an offer to buy or sell any securities mentioned herein.

We do not endorse any business or product you may find as a result of these links. The links were chosen as a sample of what the Internet has to offer. We caution you: do not enter into any agreement or purchase anything via the Internet until you and your advisors are satisfied that you are getting what you are paying for.