College costs are skyrocketing, so it's never too early to start funding a loved one's desire for further education. A 529 savings plan can help significantly.
What's a 529 plan?
529s are one of the most popular ways of investing for a college or trade school education. They are state-sponsored programs, usually managed by a financial services firm. Tax advantages and a surprising degree of flexibility are just two of the benefits that families derive from 529 plans.
Key benefits of a 529 savings plan
- Tax benefits: There are no federal taxes when distributions from the plan are used for qualified higher education expenses such as tuition, room and board, books, and more.
The availability of such tax or other benefits may be conditioned on meeting certain requirements.
- Flexibility: Use the money at eligible accredited post-secondary institutions nationwide, including undergrad, graduate, post-grad, and even vocational, or trade schools.
- Eligibility: Anyone who is a U.S. citizen or legal U.S. resident can make contributions, regardless of income.
- Suit payments to your budget: With access to approximately 30 plans, Wells Fargo Advisors makes saving for college easier with low minimum contribution options available to meet your college savings goals.
College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plan's investment options, fees and state tax implication.
529 Plans are subject to enrollment, maintenance, administrative, and management fees and expenses.
Invest with guidance
When you invest in a 529 college savings plan through Wells Fargo Advisors, our Financial Advisors provide you with planning tools to help you determine your investment goals for college, then map out a strategy designed to meet those goals.
A flexible tax-advantaged way to invest for education. Qualified state tuition programs designed for customers who want to:
- Invest for a loved one’s education or even yourself
- Make sizable contributions each year
- Shift portions of your estate to future generations
Contribution age limits
No age limit
529 plan annual contribution limits per student
- $14,000 per year per student per contributor (max $28,000 per couple)
- OR as much as $70,000 ($140,000 per couple) in the first year of a 5-year period without exceeding the annual federal gift tax exclusion
Minimum initial investment
Varies by plan
Taxation of earnings and withdrawals
- Earnings in the account grow tax-advantaged for future higher education expenses
- Withdrawals are free from federal income tax if used for qualified expenses
- The earnings portion of distributions may be taxable in years the American Opportunity Credit or Lifetime Learning Credit is used if same expenses used to qualify for credit
- Contributions may qualify for a state-income-tax deduction
Higher education expenses including tuition, fees, books, supplies, and room and board
Penalties for non-qualified withdrawals
- Earnings subject to ordinary income tax
- Subject to federal and state income tax and a 10% penalty
Securities portfolios created by specific fund managers
Ownership of assets (for financial aid)
529 Plans available through Wells Fargo Advisors
Wells Fargo Advisors offers approximately 30 plans for 27 states from well-known national providers.
Commissions and fees
Plans are generally sold by a program description that includes a description of fees, expenses, and risks that apply to an investment in a 529 college plan.
The investment return and principal value of the investment options are subject to market risk and will fluctuate, and when sold, may be worth more or less than the original cost.
Call 1-866-243-0931 to make an appointment with a Financial Advisor to compare 529 plans offered through Wells Fargo Advisors.
Ready to invest in a 529? Call Wells Fargo Advisors at 1-866-243-0931
Preparing for college, and dealing with the expenses during and after, can be overwhelming. Start by comparing your options. Education Planning Comparison Chart
Please consider the investment objectives, risks, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your Financial Advisor. Read it carefully before you invest.