College Savings Plans – Benefits, Providers, State by State

State-sponsored 529 college savings plans or state 529s for short, our investment accounts that allow you to invest and grow your college savings with a variety of tax benefits. Presently all 50 states and the District of Columbia offer state 529 college savings plans.

Tax Benefits of State 529  College Savings Plans

There are several tax benefits of state 529 savings plans. Investments in 529 savings accounts tax-free, which means that no federal income taxes levied on dividends that the investments pay while you own them, on capital gains issue realize upon selling assets in the account to cover qualified college related expenses. Withdrawals are also tax-free as long as you use the proceeds for qualified expenses.

In some states 529 contributions qualify for state income tax deductions though they would not for federal income tax deductions. You would need to check with your state’s Department of taxation and revenue to see if you qualify for state tax deductions.

The federal government offers tax credits of up to $1500 per year for the first two years of college in $1000 for subsequent years of college and other qualified forms of higher education you can claim these credits when used money from your state 529 savings plan to pay for tuition and certain related expenses.

College Savings Plans Providers

You can establish and fund a State 529 college savings plan through a broker or by working directly with the state. Many states offer several broker sold in direct plans, each of which contains a different set of investment options. Some states offer just one broker sold plan and a similar direct sold plan.

College Savings Plans Eligibility

State 529 college savings plans have no residency requirements, and you can invest in any states plan, regardless of where you live most states 529 that no age restrictions contributors and beneficiaries of any age are eligible.

College Savings Plans Qualified Expenses

You can use the money in your state 529 college savings plan to fund a variety of higher education related expenses, including tuition room and board, supplies, books, and computers.

College Savings Plans Contribution limits

State 529 college savings plans have high total contribution limits compared to other college savings plans. The average upper limit is currently over $235,000 and some plans have even higher limits. Rollover options current tax rules allow you to roll over your college savings account from one state’s plan to another states plans once a year. Most plans charge fees or for such rollovers, which range between $25 and $75.

State-by-State Savings Plans for a College Education

As you research different savings plans for college, you will discover that each state has something unique to offer. While some plans have similar components, the actual program, as well as amount of savings changes depending on the state in which a child would attend college. Although we cannot cover all the different plans for all 50 states, we did want to offer a couple of examples to show you the differences that exist. The important thing to remember is that if you need to find financial aid for your child to attend college, money is available. In fact, experts estimate that more than $1 billion dollars in financial aid goes unused every year.

The best time to start saving for your children’s college education is now. College savings plans are tax advantage investment accounts designed to make it easier to save for college and other education related expenses. There are various types of plans offered by state governments, college consortiums, and financial services firms including one of the more popular options a 529 college savings plan. The 529 plans are named for the section of the US Internal Revenue Code establish them.

The benefits of college savings plan are many, however, there are two major benefits. Those two major benefits are tax savings in pre-payment of tuition. Your contributions made into a qualified college savings account grow tax-deferred, which means you don’t pay federal taxes on the dividends and capital gains that you receive before you withdraw any money from the account.

You can withdraw money for certain qualified education related expenses and your investments are also tax free mean you don’t pay tax upon withdrawal. Since investments in the standard taxable accounts are tax at rates ranging from 15 to 35%, the potential savings in taxes from investments in the college savings plan is substantial. There is a catch however, if you withdraw money for purposes other than qualified educated related expenses, you’ll pay taxes plus up to a 10% penalty on your withdrawals.

Many college savings plans allow you to pay for college at today’s tuition rates even if the beneficiary of your account, typically your child won’t be attending college for years. Obviously the benefit is since the rising cost of higher education typically outpaces inflation, paying the tuition early can save thousands of dollars.

Most college savings plans are set up by parents or grandparents on the behalf of the children and grandchildren. However, any adult can set up a college savings plan for any beneficiary. You can even set up college savings plans in which you name yourself as a beneficiary. In other words you can use these plan to save for your own education weather for a college degree or perhaps a graduate degree or any other qualifying educational program.

College savings plans are long-term investment. As with most investments you will ride the up-and-down gyrations of the market conditions and the economy. Keep in mind that if you begin a college savings plan early enough your account balances should not suffer any significant losses.

The point is if you have children and you plan to send them to college you would be wise to enroll in some type of 529 college savings plan.

Keep in mind that a number of different savings plans exist but for sake of example, we have chosen to focus on the 529 plan. With this, you would have the opportunity to set money aside to help your child go to college. With this particular plan, by the time the child graduates from high school, funding is ready to be used to help with things such as tuition, books, lab time, etc. The bottom line is that more than 70 unique 529 plans are currently being offered, which has nothing to do with other financial aid opportunities. In addition, several states such as Alaska have more than 529 plans so to keep the information somewhat brief, just one has been listed.

State Name of Plan Associated Fees Contribution Limit
Alabama The Higher Education 529 Fund 0% 0.78% to 1.72%
Alaska John Hancock Freedom 529 0.75% 0.55% to 1.23%
Arizona College Savings Bank 0.3% 0.49% to 0.75%
Arkansas The Gift College Investing Plan 0.87% 0%
California Stable Value Plus College Savings Plan 0.75% 0%
Colorado Scholar’s Choice College Savings Program 0.35% 0.67% to 0.99%
Connecticut Connecticut Higher Education Trust 0.01% to 0.5% 0% to 0.27%
DC The DC College Savings Plan 0.15% 0% to 1.69%
Delaware Delaware College Investment Plan 0.3% 0.47% to 0.81%
Florida Florida College Investment Plan 0.75% 0%
Georgia Georgia Higher Education Savings Plan 0% to 0.78% 0%
Hawaii Tuition EDGE 0% to 0.95% 0%
Idaho Idaho College Savings Program 0% to 0.7% 0% to 0.15%
Illinois Bright Start College Savings Program 0.99% 0%
Indiana College Choice 529 Plan 0.4% to 0.95% 0.35% to 1.49%
Iowa College Savings Iowa 0.62% 0%
Kansas Learning Quest Education Savings Program 0% to 0.39% 0.12% to 0.92%
Kentucky Kentucky Education Savings Plan Trust 0% to 0.8% 0%
Louisiana START Savings Program 0% 0% to 0.28%
Maine NextGen College Investing Plan 0% to 0.5% 0.47% to 1.11%
Maryland Maryland College Investment Plan 0.38% 0.5% to 0.75%
Massachusetts U. Fund College Investing Plan 0.3% 0.47% to 0.83%
Michigan Michigan Education Savings Program 0% to 0.6% 0%
Minnesota Minnesota College Savings Plan 0% to 0.65% 0%
Mississippi Mississippi Affordable College Savings Program 0% to 0.7% 0.11% to 0.15%
Missouri Missouri Savings for Tuition (MOST) 0% to 0.65% 0%
Montana Pacific Funds 529 College Savings Plan 0% 0.95% to 2.05%
Nebraska AIM College Savings Plan of Nebraska 0.35% 0.58% to 1.91%
Nevada Columbia 529 0.6% to 0.79% 0%
New Hampshire The Advisor College Investing Plan 0.3% 0.47% to 0.83%
New Jersey Franklin Templeton 529 College Savings Plan 0.4% 0.45% to 0.85%
New Mexico The Education Plan’s College Savings Program 0.25% 0.55% to 0.7%
New York New York’s College Savings Program (Advisor Plan) 0.55% 0.25% to 1.35%
North Carolina North Carolina’s National College Savings Program 0.1% to 0.25% 0.05% to 1.16%
North Dakota College SAVE 0.5% 1.17% to 1.71%
Ohio College Advantage Savings Plan Direct 0% to 0.41% 0% to 1.37%
Oklahoma Oklahoma College Savings Plan 0% to 0.65% 0% to 0.12%
Oregon MFS 529 Savings Plan 0.25% 0.7% to 1.67%
Pennsylvania TAP 529 Investment Plan 0.35% 0.45% to 1.29%
Rhode Island College Bound Fund 0% 0.4% to 1.37%
South Carolina Future Scholar 529 College Savings Plan 0.2% 0.1% to 0.41%
South Dakota Legg Mason Core4College 529 Plan 0.53% to 1.2% 0.67% to 0.85%
Tennessee Tennessee’s BEST Savings Plan 0% to 0.8% 0%
Texas Tomorrow’s College Investment 0% to 0.1% 0%
Utah Utah Educational Savings Plan 0% to 0.25% 0% to 0.16%
Vermont Vermont Higher Education Savings Plan 0% to 0.8% 0%
Virginia College America 0.39% to 0.53% 0.24% to 0.74%
West Virginia Smart 529 College Savings Option 0.3% 0.86%
Wisconsin EdVest 0.12% to 0.3% 0.05% to 0.95%
Wyoming College Achievement Plan 0.9% 0.92% to 1.53%

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