By Debbie Placke, Vice President, Manager, Financial Planning Tools and Marketing

Print This Post Print This Post

What is on your shopping list this year? How many of your children or grandchildren need more toys or gadgets? Looking for a new idea that will not only save you time and give you peace of mind, but will be the best Christmas present your little loved ones will receive? Give the gift of education! If you haven’t started a 529 plan or funded your loved one’s 529 plan for the year that could be the most valuable gift for this holiday season.

The contributions that you make to a 529 plan can count as part of your annual gift exclusion up to $15,000 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, fees and room and board for the 2018-2019 school year is $21,370 for in-state residents at public colleges, out-of-state or private universities can be almost double that. Multiply that by 4 years, adjust for inflation and that cost can be astronomical! For a 5-year-old attending an in-state university in 13 years that cost could escalate to almost $200,000 assuming an inflation rate of 6%. In order to cover this bill you would have to begin saving $8,221/yr. in a taxable account vs. $7,516/yr. in a 529 account assuming an average 5.65% annual return.

If you haven’t funded a 529 plan for those little sweethearts in your life, give the gift that will keep on giving! 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.