Fund Your Next Career, Retirement Hobby, or Side Gig with a 529 Plan

 

Fund Your Next Career, Retirement Hobby, or Side Gig with a 529 Plan

 
 

- min read

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A growing number of Baby Boomers are choosing to complete or continue their education in retirement rather than hit the links or mahjong table. And why not? As a recent article published on Nasdaq.com noted, in addition to keeping abreast of recent trends and expanding their social circle, going back to school can give retirees the opportunity to learn new skills to engage in side hustles like web design or affiliate marketing.

And it’s not just retirees. A great way to get out of a career rut is to go back to school and take courses in something you may be more interested in.

Those looking at a career change or side hustle may not have unlimited resources to pay for courses. That’s why many are looking for flexible solutions to cover expenses. And when it comes to flexible financial solutions for education, few match the versatility of a 529 account with The Education Plan®. Here are a few key questions and answers if you’re looking to fund your next act:

Can you use 529 funds to cover your own educational expenses?

Yes! You can use money in a 529 plan for your education now or for the future. The funds can be used to take courses at a qualified college or trade school, towards a degree or for a certificate program. You can find a list of qualified institutions by using the U.S. Department of Education’s accreditation search tool.

Can you use unused funds from the 529 plan that you set up for your kids?

Absolutely! If you have leftover funds in an existing 529 plan that you own for a child, grandchild, niece, nephew, etc., you can decide to transfer and use those funds for your own education expenses. To make this happen, you will need to name yourself the beneficiary of the 529 account.

Can you set up a 529 plan for yourself?

Yes! Setting up a 529 plan for yourself is just as easy as setting up one for someone else. Just make yourself the beneficiary of the funds.

What happens to your 529 plan if you decide not to go back to school?

If you change your mind and decide not to go back to school, don’t worry. You can always change the beneficiary of the plan you set up for yourself to a child, grandchild, niece, nephew, sibling, or any other eligible member of the family (even in-laws!) without paying tax on the transfer.

What expenses are covered by 529 funds?

You can use 529 funds to pay for tuition, books, university fees, computers, and even software, as long as these goods and services are used as part of your education. You can see the expansive list of qualified expenses here.

What expenses aren’t covered?

You won’t be able to use funds from your 529 plan to pay for transportation and travel costs, application and testing fees, health insurance, sports expenses or health club dues, or to pay for the mortgage on a house, condo, or other residential property while you are enrolled in college. A mortgage payment is a payment on a loan and not a payment of housing costs. As such, it is not a qualified higher education expense.

Are contributions to a 529 plan tax deductible?

If you are a New Mexico resident, contributions to your 529 account are eligible for deduction from your New Mexico state taxable income each year. What’s more, the earnings in your account are not taxed and withdrawals are tax-free as long as they are used for qualified expenses. Some states have tax benefits for contributions to an out-of-state 529 plan. Before investing in a 529 plan, we recommend consulting a tax advisor to determine your state’s tax benefits and if it imposes any limitations on the use of 529 contributions.

Is there an age limit?

There are no time or age limits on using a 529 plan. Money can be kept in a 529 plan indefinitely. There is also no age limit on contributions to a 529 plan. You’re never too old to start school. And you’re never too old to be the beneficiary of a 529. Any U.S. citizen or resident 18 years or older with a valid Social Security number or a Taxpayer Identification Number (TIN) can open a 529 savings account, and you do not need to be related to the beneficiary. You can even open an account for yourself. The account owner must be at least 18 years of age and both the account owner and beneficiary must be a citizen or resident of the United States with a Social Security number or TIN.

There’s more!

Visit our Learning Center for a wealth of detailed information on the tax-advantaged benefits of 529 plans, including details on how to open an account, how to save, which family members qualify to receive these benefits (you might be surprised), when and how to take withdrawals, how to choose or change a plan beneficiary, and much more.

Consider opening a tax-advantaged account with The Education Plan to help fund your next act today.

 

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

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The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

All other marks are the exclusive property of their respective owners.

Not FDIC-Insured. No Bank, State or Federal Guarantee. May Lose Value.