DES MOINES, IA (05/09/2013)(readMedia)-- With graduation season upon us, there is no better time than now to start planning for the future. Whether your children are graduating from grade school or high school, a contribution to their College Savings Iowa 529 Plan account is a great way to show how proud of them you are!
Saving for college is one of the most significant things you can do for a loved one. With the cost of a college education rising faster than inflation, the majority of families will have to plan ahead in order to meet the challenges of paying for their children's higher education. My advice is to start saving early and to save regularly. Even a small amount of money, saved on a regular basis over an extended period of time, can grow into a substantial amount. Saving early may help reduce a family's need to borrow to cover educational expenses, which will help parents - and their children - get through college with less debt.
While any form of saving for college is better than not saving at all, there are advantages to using a 529 plan, such as College Savings Iowa. Administered by the state treasurer's office, College Savings Iowa offers multiple investment choices, including four age-based options that take into account the child's age and the account owner's tolerance for risk. As a general rule, age-based accounts opened for younger beneficiaries are heavily invested in stocks early on; these accounts try to maximize returns by taking advantage of the longer time horizon. As the beneficiary nears college age, the assets are automatically shifted to more conservative portfolios. This allows you to protect your capital and reduce the market risk before you begin making withdrawals for college expenses.
In addition, 529 plans offer significant federal and state tax benefits to help grow your savings even more. Contributions and earnings grow free of federal and Iowa state income taxes while invested and remain tax-free when used to pay for qualified higher education expenses at any eligible college, university, community college or accredited technical training school in the United States or abroad. Iowa taxpayers who are participants in College Savings Iowa are also allowed to deduct up to $3,045 in contributions per beneficiary account from their 2013 adjusted gross income.*
With initial and ongoing contribution amounts as low as $25, College Savings Iowa is an affordable way for families to save in order to meet the rising costs of higher education. College Savings Iowa's multiple contribution methods, including electronic investment options that allow you to transfer money directly from an existing checking or savings account, make it easy for busy families to save regularly and manage their accounts.
As a way to help families start saving, we are celebrating 529 College Savings Day on May 29 and giving away a $5,290 College Savings Iowa account. For more information and to enter the giveaway, please visit www.my529iowaplan.com anytime before May 29.
While a college education is an investment that lasts for a lifetime, the season to save for it is a lot like summer vacation - much shorter than you think. Start saving today and help make college a reality for a child in your life - you'll be glad you did! For more information about College Savings Iowa, visit www.my529iowaplan.com or call 888-672-9116.
* Adjusted annually for inflation. If withdrawals are not qualified, the deductions must be added back to Iowa taxable income. The earnings portion of nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
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Investment returns are not guaranteed and you could lose money by investing in the plan. Participants assume all investment risks as well as responsibility for any federal and state tax consequences. If you are not an Iowa taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
For more information about the College Savings Iowa 529 Plan, call 888-672-9116 or visit www.collegesavingsiowa.com to obtain a Program Description. Investment objectives, risks, charges, expenses, and other important information are included in the Program Description; read and consider it carefully before investing.
