Good Afternoon,
One of the many benefits of being a client of LJI Wealth Management is our commitment to keeping you informed and educating you about the many financial tools available to individual investors. With that in mind, what better topic to discuss on 5/29 than the 529 College Savings plan?
A 529 College Savings plan or “529” is an account that allows parents/grandparents to save for their child/grandchild’s education. Once funded, the money can be invested into the market, it grows tax-deferred and can be withdrawn tax free when used for qualified education expenses. As of 2017, that includes up to $10,000 annually for K-12 tuition expenses as well.
Although there is no Federal income tax deduction for 529 contributions, many states offer income tax deductions or credits. For example, Indiana taxpayers can claim a state income tax CREDIT of 20% of their contributions, up to a maximum credit of $1,500 per year, per household. So, a married couple contributing $7,500/yr, will receive a $1,500 tax credit on their State of Indiana returns. If you reside in another state, please reach out and we can help determine the tax advantages with your state 529 plan.
At LJI, we hold the core belief of not charging clients for education planning. For that reason, we make sure our Indiana clients use the 529 Direct Savings plan vs the 529 Advisor plan, saving on up-front commission charges with each deposit.
If you are considering a 529 College Savings plan for a child, grandchild, or yourself, please do not hesitate to reach out to start that conversation.
Happy 5/29 Day.
Your LJI Team