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529k / College savings accounts

Many of our clients recognize the importance of a college education for their children or grandchildren. Alongside the importance of education comes its cost. At All American Advisors, we endeavor to provide our clients with simple and beneficial options to planning strategically for the financial burden associated with higher education.

A 529 plan (or college savings plan) is a tax-advantaged investment vehicle designed to encourage saving for the future higher education expenses of a designated beneficiary. A 529k College Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to the plan participant.

There can be significant state tax advantages and other benefits (such as matching grant and scholarship opportunities, protection from creditors and exemption from state financial aid calculations) for individuals who invest in 529k college plans. At All American Advisors, we help to ensure that our clients are able to reap all of these benefits.

529k plans are usually categorized as either prepaid or savings, although some have elements of both.

  • Prepaid plans allow one to purchase tuition credits, at today's rates, to be used in the future. Therefore, performance is based upon tuition inflation.
  • Savings plans are different in that all growth is based upon market performance of the underlying investments. Most 529 savings plans offer a variety of age-based asset allocation options where the underlying investments become more conservative as the beneficiary gets closer to college-age. They also offer risk-based asset allocation options where the underlying investments maintain the same equity-to-fixed-income ratio regardless of the age of the beneficiary. Many savings plans also offer a stable value or guaranteed option designed to protect an investor's principal while providing for some investment growth, while others offer investments in certificates of deposit.

Amongst other advantages associated with 529 College Savings Plans, our clients benefit from the investment because:

  • All money grows free from federal and state income-tax
  • The account holder retains control of the assets within the program regardless of beneficiary's age
  • The beneficiary can be changed at any time to another member of the beneficiary's family
  • Money can be used to pay for tuition, fees, room, board, books, supplies and required equipment
  • High maximum contribution limits

Let the knowledgeable and professional team at All American Advisors help you explore your options with 529 College Savings Plans.

Contact us for a free assessment of your 529 College Savings options.

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