Benefits of 529 Higher Education Savings Plans

Everyone wants to help their children, grandchildren, nieces or nephews realize their dreams, whether it's to become a doctor, architect, engineer or fashion designer. And everyone knows how expensive a college education can be.

Section 529 higher education savings plans-available through our broker-dealer, CUSO Financial Services, L.P. (CFS)-provide a flexible, tax-efficient way for parents, grandparents or legal guardians to save money for future education costs. Some of the benefits of these plans include:

• The ability to use the accrued monies to pay for a broad range of qualified expenses, including tuition, room and board, books, supplies, computers, and special equipment at most accredited post-secondary institution.
  
  
• The ability to use the accrued monies at a number of different types of institutions of learning, including public and private two- and four-year undergraduate programs, graduate schools, vocational and technical schools, and even professional schools.
  
  
• The fact that the account owner maintains control of how the funds are distributed and to whom, unlike many other savings programs.
  
  
• Penalty-free withdrawals from the assets, in the event that the beneficiary receives a scholarship, or in the event of the death or disability of the account beneficiary.
  
  
• The financial assets withdrawn from these accounts and used for qualified higher education expenditures are free of federal income taxes.*
  
  
• Very generous contribution limits (up to approximately $250,000 of contributions and earnings, per individual beneficiary).

Typically, one account is established for each individual that the parent or grandparent wishes to be the beneficiary of the investment. An asset portfolio is then selected, from among several options ranging from conservative to aggressive. Under current federal regulations, account owners are allowed to reallocate investment positions only once each calendar year. As is true with most investments, even small contributions can add up over time. The younger the beneficiary, the more time the investment has to grow before the educational expenses are incurred. To help you decide which plan is right for your situation, schedule an appointment with one of Space Coast Credit Union's financial professionals. There is no cost or obligation for your meeting.

Email us at invest@sccu.com.

Before investing in a 529 college savings plan, you should consider whether the state you reside in or have taxable income in, has a 529 college savings plan that offers favorable state income tax or other benefits that are only available if you invest in that state's plan. For specific tax advice, please consult a qualified tax professional.

*For tax advice, consult a qualified tax professional. Products and services offered through CUSO Financial Services, L.P., are not NCUA or NCUSIF insured, not credit union guaranteed, and may lose value. Financial advisors are employees of Space Coast Credit Union and registered representatives of CFS. Space Coast Credit Union is in partnership with CFS. (Member FINRA/SIPC).

The information on this page is for educational purposes only. SCCU is not engaged in providing estate planning or other advice. Please consult with a competent estate planning professional regarding any specific estate planning questions.