What You Need to Know About College Savings Plans

 

What You Need to Know About College Savings Plans

 

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As a parent, saving for your child's college education can be a daunting task. With the rising cost of tuition, it's important to start planning early and explore all your options.

When it comes to college savings plans, 529 accounts are helpful tools to maximize savings and grow funds over time. According to the College Savings Foundation (CSF), 529 plans are the top choice for saving for education. A growing number of families have turned to 529 plans to prepare for the mounting costs of education. In 2021, 529 accounts had over $480 billion in assets and there are nearly 16 million 529 account holders across the nation, according to College Savings Plans Network (CSPN).

A 529 plan is a tax-advantaged education savings plan designed specifically for education expenses. It's named after Section 529 of the Internal Revenue Code, which was created in 1996 to encourage families to save for college. The Education Plan® is New Mexico’s official 529 education savings plan. Individuals from any state and US territory can open an account with The Education Plan.

One of the main benefits of a 529 education savings plan is that the funds in the account can grow tax-free. This means that any earnings on your investments in a 529 account are not subject to federal income tax, and in some cases, state income tax when funds are used to pay for qualified education expenses. Additionally, many states offer tax deductions or credits for contributions made to a 529 plan. In New Mexico, 100 percent of contributions can be deducted from your state income tax when funds are used for qualified expenses.

Another advantage of a 529 plan is flexibility. You likely don’t know what educational path your child or grandchild will take. With a 529 plan, that’s okay. The funds can be used for a variety of qualified educational expenses, including tuition, fees, books, room and board, and computer equipment. You can also use the funds for any eligible education institution, including trade schools, community colleges, and universities and even some institutions abroad.

When it comes to college savings, contributions can really add up. With a 529 education savings plan you can effectively crowd source college savings. Anyone can open or contribute to a plan, including grandparents, aunts, uncles, and friends. The Education Plan makes this even easier with Ugift. The program allows you to create a simple code that you can share with friends and family. They use the code to send a gift directly into the 529 account. There are even gift certificates they can print out to make the gift feel special.

Overall, a 529 education savings plan with The Education Plan can be a valuable tool for saving for your child's future education. It offers tax benefits, flexibility, and the potential for tax-free growth. With careful planning and savings, you can help provide your child with the education they need to succeed.

 

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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.

Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC.

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.