A Powerful College and Estate Planning Tool

The “529” Plan is a college savings plan that allows US Citizens and permanent residents to invest money for higher education on a Tax Advantaged basis, for use at any accredited post secondary school, college or university in the country.

Why Start Now?

• Saving for college is most investors’ number-two investment goal, behind retirement.
• The average four-year private college including room and board now exceeds $23,500.
• The price of an education at a four-year private college for the student enrolling ten years from now will exceed $150,000.

Donor Advantages

• Contributions are treated as a completed present-interest gift for gift tax purposes.
• Monies are immediately removed from the taxable estate and qualify for the $10,000 annual gift tax exclusion.
• A special election allows the gift to be treated as if made over a 5 year period ($50,000 for single, ($100,000 for couple); assuming no other gifts.
• The donor can establish multiple beneficiaries.
• No income limitations or age restrictions.
• Plan assets are portable.
• The donor remains in complete control and may even transfer or revoke the gift.

Beneficiary Advantages

• Gains on investments grow federally tax-deferred until withdrawn.
• When withdrawn, gains are taxed at the ordinary income tax rate of Beneficiary (usually 15%).
• Advantageous Financial Aid impact.
• Monies can be utilized for room, board, tuition, and supplies.
• Scholarships and grants can be withdrawn penalty-free.
• High maximum contribution limits.

For more complete information about the 529 savings plan, including investment objectives, risks, fees and expenses associated with it, please read the issuer’s official statement.  The issuer’s official statement can be obtained from your financial advisor.  Please read it carefully before investing.   

Please consider, before investing, whether your home state offers any state tax or other benefits that are only available for investments in your state’s qualified tuition program. Other benefits may include reduced or waived program fees, matching grants, and scholarships to state colleges.  Additionally, please note that unless Congress takes action, earnings withdrawn from a 529 plan account after 2010 to pay for qualified higher education expenses will be subject to federal income tax. 

Certain states may impose a penalty for “non-qualifying” withdrawals and if you were able to deduct the original contributions on state income tax return, there may be a state “recapture” of income tax due. A 10% federal penalty on earnings will apply if you receive a non-qualified withdrawal.

For information on how you can get started, contact us today.

Securities offered through 1st Global Capital Corp. Member FINRA, SIPC. We currently have individuals licensed to offer securities in the states of California, Delaware, Florida, Illinois, Maine, Maryland, New Jersey, New York, Pennsylvania, Tennessee, Texas, Vermont, and Virginia. This is not an offer to sell securities in any other state or jurisdiction. Asher Financial Advisors, LLC, is not affiliated with 1st Global Capital Corp.