Request a Quote from an OMNI LSMS Representative
Making the gift of knowledge easier to give.
What is a 529 plan, and what are the benefits?
Created in 1996 by Section 529 of the Internal Revenue Code, a 529 plan is a qualified, state-sponsored program for tax-deferred college savings. The plan can be used to pay for education costs at any eligible college, university or graduate school in the united states.
There are other college savings vehicles, including Education IRAs, UGMAs (Uniform Gifts to Minors Act), UTMAs (Uniform Transfers to Minors Act) and Series EE Savings Bonds. But there are benefits offered by 529 savings plans that exceed these alternatives.
Here are some of the advantages that set 529 savings plans apart:
- Enhanced Gift and Estate Tax Benefits: 529 plans allow you to make greater contributions without incurring a gift tax. In many cases, an individual can contribute up to $50,000 per beneficiary at once without triggering the gift tax. This enables 529 account holders to significantly reduce the taxable value of their estate, while helping to pay education costs for a child, grandchild or relative.
- Substantial Tax Deferral and Savings: Earnings grow tax-deferred until the money is withdrawn, maximizing account growth potential. Then, withdrawals can be taxed at the rate of the beneficiary student, which may be as low as 15%, maximizing the money available for education.*
- Greater Control: As an account holder, you have control over your 529 savings plan. You control withdrawals. You can change the beneficiary at any time. You can even request the current account value be refunded.
- Choice: A wide array of investment strategies and portfolios are available to choose from.
Selecting the right 529 plan can make all the difference for you and for your beneficiary.