One of the topics at the Financial Literacy conference I attended on Thursday was College Save
A 529 plan is a tax-advantaged program created by Congress to help families like yours save for future education expenses. The name, "529," comes from section 529 of the Internal Revenue Code that specifies the plan's tax advantages.
Most 529 plans are sponsored by individual states and, to encourage their residents to save for college, many offer tax incentives to residents who invest in their 529 plan. The College SAVE Plan is sponsored by North Dakota, which offers a special tax deduction to its taxpayers.
College SAVE is the only 529 plan in the country that offers North Dakota taxpayers a state tax deduction. Single individuals can deduct up to $5,000 of contributions from income on state tax return each year. Married couples filing jointly can deduct up to $10,000 of contributions from income on their state tax return each year.
When you enroll in a 529 plan, you will be able to choose from a variety of professionally managed portfolios. It is never too late to start saving in a 529 plan, but the earlier you start, the more time your money will have to work for you.
The minimum amount for initial and ongoing contributions is $25.
College SAVE investors who are ND residents may qualify for a matching grant of up to $300 from the Bank of North Dakota. Grandparents may qualify for the matching grant due to lower retirement income.
At the most basic level, there are five steps involved in using a 529 plan:
1. Review the plan disclosure statements and choose a 529 plan that fits your needs (be sure to check your or your beneficiary's home state 529 plan to see if there are benefits)
2. Open an account, either online or by paper form
3. Select from the plan's investment options
4. Contribute over time via check, automatic investment plan, or electronic bank transfer1
5. When your designated beneficiary is ready to attend college, use your 529 plan account assets to pay for tuition and other qualified higher education expenses2
See the College Save website for more information.