College Saving Plans
College Saving Plans Testimonials
My husband and I have been with Langan Financial for over 10 years. With their guidance and knowledge, we (in our late 30s) have a clear and comprehensive plan on how to send our children to college and retire comfortably.
We have complete trust in the team at Langan Financial Group.
They've been nothing short of exceptional in every way, and have handled everything with care, courtesy, and patience.
Langan Financial Group has also provided key educational resources that have helped me make financial decisions to benefit my family's future. I would highly recommend them for all of your financial needs.
What is a 529 Plan?
529 Plans were created in 1996 to address the increasing cost of college tuition. To make secondary education more affordable, the government wanted to create a tax-efficient investment opportunity to minimize expenses.
Types of 529 Plans
529 College savings plan
A 529 college savings plan allows an individual to invest money and grow tax-free over time.
Prepaid tuition plan
A prepaid tuition plan allows an individual to purchase part or all of the tuition for in-state schools.
What Education Expenses Qualifies for 529 Plans?
In 2017, the federal government expanded the definition of qualified education expenses for 529 Plans. It was no longer only for college tuition, but it can now be used for:
- College
- K-12 tuition
- Apprenticeship programs
- Student loan repayments
How to Open a 529 Plan
Setting up a 529 plan is a very simple four-step process.
- Identify the right plan for you
- Identify your beneficiary for the plan
- Open the 529 account
- Build your investment portfolio
5 Benefits of a 529 Plan
A 529 Plan, if used correctly, offers tax benefits for qualified education expenses.
These funds can be used for the designated beneficiary's continued education through numerous avenues. It has several benefits including:
1. 529 plans grow federal tax-free
For Federal taxes, 529 plans will not be taxed when the money is taken out to pay for any qualified education expense.
As of January 1, 2018, tax-free withdrawals may also include up to $10,000 in tuition for expenses for K-12 schools per beneficiary.
2. 529 plans may have state-offered tax breaks.
States vary depending if they offer full, partial, or no tax deductions or credits. As of now, over 30 states currently offer either full or partial tax benefits.
3. Everyone is eligible
4. Low maintenance
A 529 Plan does not require a lot of upkeep or time. Once you get the plan set up, along with the contributions, the only thing you need to do is review its performance.
Even the tax reporting is simplified for this tool! Contributions to a 529 plan do not have to be reported on your federal tax return. You will not receive a 1099 form until you make a withdrawal.
5. 529 Plan Contribution limits
529 Contribution Limits
529 plan contributions are considered completed gifts for federal tax purposes. In 2023, a beneficiary could receive up to $17,000 per donor for the annual gift tax exclusion.Â
Anything in excess must be reported to the IRS and will count against the taxpayer's lifetimme estate and gift tax legacy fund exemption ($12.92 million in 2023).Â
In addition, each state sets a total limit for 529 plan contributions. The limit can be applied either to an annual contribution amount or a maximum amount over the life of the account.Â
States determine these limits based on tuition costs for higher education programs within the state.
What Does a 529 Advisor Do?
A 529 plan advisor will work with you to ensure your goals and plan tactics are aligned. In addition, the advisor should be monitoring your investments to ensure they are performing as needed.
If any investment option is not performing well, the advisor should alert you to the issues and provide alternatives to get you back on track.
In addition, the 529 advisor should be reviewing your investment returns with you and discuss if you are on track to meet your goals.
If you are that is great, but if not, the advisor should provide options to help you reach your education savings plan.
Help Secure Your Child's Future!
Chat with a 529 Advisor
If you have any 529 planning questions or concerns, please feel free to contact us for a free consultation.
You can reach us at 717-288-1880 or visit our contact us page to send an inquiry. We will be sure to respond within 24 hours.
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Disclosure: Check the background of your financial professional on FINRA's BrokerCheck. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Cambridge and Langan Financial Group, LLC. are not affiliated. Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of: AL, AZ, CO, DE, FL, GA, IA, KY, MD, NJ, NM, NY, NC, OH, PA, TX, VA, WI Cambridge and Langan Financial Group does not offer legal advice. Estate planning services are in regards to your overall financial plan. Always be sure to speak to a legal professional in regards to specific legal matters. Fixed insurance services offered through Langan Financial Group.
Testimonial/Endorsement Disclosure: The testimonials may not be representative of the experience of other customers. The testimonials are no guarantee of future performance or success. All of the testimonials/endorsements are clients with the exception of Steven Martinez of York SPCA. There was no cash nor non-cash compensation for any of the testimonials provided.
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Harrisburg, PA Office
Address: 1863 Center St, Camp Hill, Pa 17011
Phone: 717-288-1880
York, PA Office
Address: 3405 Board Rd, Suite 200, York, Pa 17406
Phone: 717-773-4085
