529 College Savings Plans – More than Meets the Eye
May 16, 2017
Heard of 529 college savings plans but still aren’t sure they’re for you or your family? You may be surprised to learn there is more to these plans than meets the eye.
In fact, outside of the great tax benefits they offer, 529 plans such as South Carolina’s Future Scholar College Savings Plan have a number of “hidden” benefits many parents aren’t aware of.
Here are just a few:
You’re not tied down to one beneficiary.
It’s true. Owners of 529 plans aren’t required to use all of the money saved in their account on just one child. This is great news for parents or grandparents saving for multiple children.
If one child decides not to go to college for some reason or doesn’t use all of the funds, the account can be switched to another sibling or family member. Accounts can even be passed down from generation to generation. So the money you save today may someday benefit your children’s children!
No scholarship penalties.
Let’s say your child receives a partial or full scholarship. Congratulations! That’s quite an accomplishment. However, you may be worried your child’s scholarship will affect the money you’ve accrued in your fund. It won’t.
While the earnings on funds withdrawn would be subject to federal and possibly state income tax, you can withdraw up to the amount of the scholarship without a 10% federal penalty.
In addition, remaining funds can be used for educational expenses not covered by the scholarship, or, as we mentioned, a new beneficiary can be named.
529 plans cover a wide range of colleges and programs.
Have an aspiring chef at home or a loved one looking at a “non-traditional” career trajectory? Don’t fret. Many 529 plans can be used to pay for a wide range of colleges and programs.
In fact, the money you save in a Future Scholar plan can be used at any eligible educational institution in the United States, including both public and private colleges, out-of-state colleges, some international schools, graduate and professional programs and certain vocational-technical schools like cooking school.
“Opening a Future Scholar 529 College Savings Plan is a great way to save for college,” said South Carolina Treasurer Curtis Loftis. “The benefits are tremendous and in addition to the wonderful tax advantages, there are lots of other ways your family can benefit. Open one today.”
To find out more “hidden” benefits of 529 plans, read on: http://www.cnbc.com/2017/05/04/10-hidden-benefits-of-529-plans.html.