College PlanningLegacy Planning

National 529 Day – 5 Things to Know About 529s

By May 30, 2019 May 31st, 2019 No Comments

5 Things to Know About 529 Plans – Video Transcription

Hi there, I’m John Weninger, Fiduciary Wealth Advisor at Endowment Wealth Management and in honor of yesterday being May 29th or 5/29. I thought I’d do a quick video and share with you five things that you should know about 529 educational savings plans.

And let’s see if I can get it done in under 5:29 as well!

Let’s try. So the first thing is who can open a 529 educational account? And that’s really anyone anyone in any state can open a 529 account. So whether you’re a single person saving for your own education, maybe you’re a young family and you’ve got young kids and you’re saving for their education, or perhaps you’re even grandparents – you’ve got grandkids or maybe even great grandkids. You can leave a legacy and save for their education as well. So really anyone can open a plan. And you can open as many accounts per beneficiary as well. So if you have, let’s say two kids you can open two accounts and for each of your kids.

Now number two is tax bene’s. What are the tax benefits of a 529 savings plan? The money that you contribute to a plan is not Federally tax-deductible. So it’s after-tax money that goes in to the plan, mhowever, Once the money is in the account and it begins to grow those earnings are actually tax-deferred. So very similar to your 401k account at work, perhaps, and those earnings grow tax-deferred and when you take the money out as a distribution as long as you’re using it to pay for what they call “qualified educational expenses”, things like school, boarding, tuition, technology – a lot of things that qualify, those earnings are never taxed so there’s a great tax benefit to using 529 accounts. Now in Wisconsin as an example and each state is different In Wisconsin in 2019, you can receive up to three thousand two hundred and eighty dollars Wisconsin state income deduction per account per year, so you do get a deduction in the state of Wisconsin if you’re a resident on your income tax, so that’s a great tax benefit.

Number three is invest. So you can actually invest mthe funds inside the plan, which is such a huge benefit because think about a young family with a couple of young kids that are babies or one or two years old and they’re saving for college and they’ve got a long time horizon, really can take advantage of the power of compound interest and invest inside the plan. There’s a lot usually a lot of different options inside of these 529 plans where you can use age based investments models or choose your own options. That’s something to discuss with your with your advisor. But the ability to invest is a great benefit.

Number (four) is the Tax Cuts and Jobs Act of 2017. So the new tax law which was recently passed actually contained provisions that enhance 529 plans and so for the longest time, you could only use a 529 dollars to pay for college or university expenses and now they’ve actually opened it up so you can use it to pay for K-12 expenses as well. So whether that’s public private or religious type schools you can use 529 dollars to pay for that type of educational expenses which is really great.

Then finally, the last thing to know is sort of a future enhancement that they’re talking about which is the Secure Act of 2019, which is not law yet, however, the bill was passed in the House of Representatives by overwhelming majority bipartisan support just a few days ago and among many other things inside that bill contains provisions that allow people who have student loans to pay back those student loans with 529 dollars. So we all know student loans are such a huge issue in our country which is only getting greater and so this is a this is an enhancement that they’re looking at making coming down the pipe.

So there’s 5 Things to Know About 529 plans. Anyone can open, got some great tax benefits, you can invest the funds, you can use them for a university or K-12 expenses and there’s a provision that is upcoming, perhaps, that might allow you to pay back student loans with these with these funds.

So if you have any questions about 529’s or how they might apply to your situation, please feel welcome to reach out and until next time, take care. Thanks!

Have Questions? Need an expert opinion?

If you have more questions I’m happy to help you! We make getting answers super easy, without having to talk to some high-pressure sales person. Just use the secure contact form to ask a question, or email me directly at John@EndowmentWM.com, and I’ll get back to you via email within 48 hours to help point you in the right direction. I also offer a free wealth discovery meeting where we can discuss your personal situation and make sure you’re on the right path. Remember, it’s free to contact us and we are fiduciary advisors putting your personal needs first and foremost.

Best of Success,

John Weninger, CFP®
Wealth Advisor
Endowment Wealth Management, Inc.

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John Weninger, CFP®

John Weninger, CFP®

John is a Wealth Advisor within the Family Wealth Management area of the Company. He is the first point of contact for our prospective clients, conducting introductory meetings with clients to discuss their family dynamic and wealth management needs. John assumes the role of the client family’s Chief Financial Officer and coordinates with the client’s current professionals (i.e. attorney, tax accountant, stockbroker, insurance agent) to provide an integrated wealth management plan and investment solution that is custom tailored to meet each client’s specific needs. John began his career at Merrill Lynch as an advisor assistant, serving the needs of families & small business owners. He was the founder of Vision Wealth Partners, a Wisconsin registered investment advisor and has been helping families and small-business owners with financial planning and investment management since 2011. His writing has been featured on CNBC, Yahoo! Finance, U.S. News and MyCompanyRetirementPlan.com. John received his Bachelor’s Degree from St. Norbert College majoring in Finance. He earned his Certified Financial Planner (CFP®) in 2017.