Over the years we have seen many clients who utilize 529 plans. These are some of the obvious tips we think every parent should consider when they invest. The 529 plan should always be in the parents name and never in the students name. Parents assets are assessed to a much lesser degree. If the assets are in the students name they are assessed higher in the Federal Methodology financial aid. Parents should contribute as much as they can to any 529 Plan they start. Multiple sources should also contribute when ever possible.
Whether it’s taxable for other sources is up to the tax professional. All 529 plans utilized for education and/or purposes of education are tax free. Parents should shop competitively 529 plans across others states because they are not specific to the state of residence.
We see 4 main differences in 529 Plans across different states.
- To the best of our knowledge 34 states including the District of Columbia allow parents to take full or partial deduction for 529 plan contributions. Most states only offer this benefit to residents who use their home state’s plan. Arizona, Kansas, Maine, Missouri, Montana and Pennsylvania offer taxpayers a deduction for contributions to any state’s plan.
- Flexible low minimum contribution
- Ability to roll over money from one plan to another without state tax penalties.
- Various plans will have a maximum contributions to the plan
We advise parents on differences that do impact on how much they can save from one plan to another. Parents should always speak with 529 plan expert to utilize the most current 529 plan offerings specific to their situation.
To learn more how we can help discover additional financial aid for your child’s education contact our office today.by