Kwartin & Levine | An Introduction to 529 Educational Savings Plans
Kwartin, Levine & Marlow, LLP, formed by three attorneys with a shared vision to provide a different legal experience, is founded upon the principles of friendship, accountability and integrity.
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An Introduction to 529 Educational Savings Plans

529 Plans – The Basics

A 529 plan can be a very smart way to save for future college costs for your children. 529 plans, legally known as “qualified tuition plans,” are governed by Section 529 of the Internal Revenue Code. They are usually sponsored by state agencies, colleges, or universities.

There are two types of 529 plans: pre-paid tuition plans and college savings plans. Fortunately, all states sponsor at least one type of 529 plan and some universities run their own pre-paid plans for college students. In my experience, most of my clients choose the 529 college savings plans, which do not require that their children attend college in their own states.

Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans require that you attend college in the state in which you live.

The more popular 529 college savings plans generally permit the account holder (usually the parents or grandparents) to set up an account for their child or grandchild (the “beneficiary”) for the purpose of paying for the costs of going to college. You get to pick among several investment options and then the plan administrators will invest the contributions for you. Usually you can pick standard investment packages, including mutual funds and money market funds. Most plans also allow the parents or grandparents to choose an investment portfolio tied to the age of the student. These portfolios become more conservative in their investment choices as your student gets closer and closer to attending college and then after he/she begins attending college.

When it is time to get your money out of your 529 plan, it is very easy. For example, my husband and I built up our 529 plans for our three children over the past 10 years and then paid ourselves back during each of the four years that our children attended college for all of the expenses we paid for their years away. We were reimbursed immediately and were delighted to have paid for college with money we had saved tax-free.

Elaine G. Levine

Wills, Trusts, and Probate

Named as a “Five Star Professional” Wealth Manager

Koufman, Levine & Greiner, LLP

Cell: (678) 361-4700