By Debbie Placke, Vice President, Manager, Financial Planning Marketing and ToolsPrint This Post
Tired of holiday shopping? Give the gift of education! If you have children or grandchildren in your life the gift of a college education will go a long way. College costs are rising rapidly and without a savings plan in place many students will graduate with the burden of a heavy load of debt as they struggle to start a new career and new stage in life.
The contributions that you make to a 529 plan can count as part of your annual gift exclusion up to $14,000 per beneficiary and can offer tax advantages and potentially other incentives to make it easier to save for college or other qualified post-secondary training for a designated beneficiary.
According to the College Board, the average cost of tuition and fees for the 2015-2016 school year was $9,410 for state residents at public colleges, and $23,893 for out-of-state residents attending public universities. Multiply that by four years, adjust for inflation and that cost can be astronomical! For a five-year-old attending an out-of-state university in 13 years that cost could escalate to $222,939 assuming an inflation rate of 6%. In order to cover this bill you would have to begin saving $9,163 per year in a taxable account vs. $8,370 per year in a 529 account assuming an average 5.7% annual return.
Give the gift that will keep on giving this holiday. Start a 529 plan for your loved ones today! For more information on getting a plan started, or making contributions to a plan that is already in place, contact your Benjamin F. Edwards & Co. financial advisor.
Please remember, Benjamin F. Edwards & Co. does not provide legal or tax advice, therefore it is also important to consult with your legal and tax professionals for additional guidance tailored to your specific situation.