By Michael L. Fitzgerald, State Treasurer of Iowa
March 15, 2022
While the shortest month of the year has passed, I’m not short on reasons to save for education with a 529 account. Informing families about the benefits of saving, and doing so early, is crucial in reducing the amount of student loan debt the children in our lives may face. However, there’s more to a 529 than just reducing debt. In fact, here’s a list of 30 reasons you should create an account for the children in your life:
- Save for anyone.
- Assets grow tax-deferred.
- Many states offer additional tax benefits for residents.
- Take advantage of the tax benefits, no matter your income.
- Having a dedicated savings account for education tells your children you support their dreams.
- Professionally managed investment options.
- Community colleges, trade and vocational schools, apprenticeship programs and four-year universities are all examples of eligible educational institutions.
- There are no geographical limitations, so your students can attend any qualified higher education institution in the U.S or abroad.
- Pay for qualified education expenses, including tuition, room and board, textbooks and more
- Qualified withdrawals are tax-free for all participants.
- Leave a meaningful gift for your grandchildren.
- Children with a dedicated education savings account are six times more likely to continue their education.
- You control the funds, no matter the age of the beneficiary.
- It can take as little as five minutes to create an account.
- Low minimum contribution amounts.
- Easy and long-lasting birthday and holiday gifts.
- There are no income limits for who can open an account.
- Choose from a variety of investment options to fit your comfort level and savings goals.
- The earlier you start, the more time your money has to potentially grow.
- Encourage family and friends to contribute towards your children’s future.
- Set it and forget it with recurring contributions.
- Promote higher-education awareness and aspiration.
- Increase your children’s knowledge of saving and investing when involving them in the plan.
- Enjoy little to no fees, depending on the plan you choose.
- Multiple people can open separate accounts for the same student.
- Transfer the money to an eligible family member if the student doesn’t use the money.
- No age restrictions or time limits by which the money has to be used.
- If your children receive a scholarship, you still have options.
- Many employers will allow you to participate in a payroll deduction program.
- You can even use the 529 to further your own education.
If you’ve been looking for a sign (or 30) to create a 529 account, this is it! Start by researching and choosing the right plan for you, then gather the required documentation, such as your Social Security number (SSN) and the beneficiary’s SSN. It’s smooth sailing from there. Happy saving!
About the Author: Iowa State Treasurer Michael L. Fitzgerald is the past chair of the College Savings Plans Network and the administrator of Iowa’s 529 Education Savings Programs, College Savings Iowa and the IAdvisor 529 Plan, with over $7 billion invested and more than $4.6 billion in qualified withdrawals.