By Hon. Michael L. Fitzgerald
State Treasurer, State of Iowa
December 30, 2012

The New Year is just around the corner, which means it is a great time to start thinking about saving for your child’s future education. Rather than having friends and family purchase toys that will soon be forgotten or broken, invite them to give one of the most meaningful gifts a child may ever receive – help toward paying for a college education.

While any form of saving for college is better than not saving at all, saving with a state-sponsored 529 plan has a two-fold benefit. You will not only be helping a child prepare for his/her future education, but 529 plan contributions offer a present for grown-ups too.

Contributions and earnings in a 529 plan grow free of federal income taxes and are tax-free when used to pay for qualified higher education expenses at any eligible college, university, community college or accredited technical training school in the United States or abroad.*

In addition to the federal tax benefits, thirty-four states and the District of Columbia offer state tax deductions or credits for contributing to certain 529 plans. However, most of these states require investors to contribute before the end of the year in order to reap the tax benefits in 2012. Anyone interested in contributing to a 529 plan should consider doing so before December 31st to take advantage of any year end state tax savings. To learn about the different state’s 529 plans, visit the College Savings Plans Network’s website at

As you look ahead to your New Year plans and resolutions, be sure to consider opening a 529 Plan to begin saving for a child in your life today. You will be glad you did!

*Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

About the Author:
Iowa State Treasurer Michael L. Fitzgerald is the Chair of the College Savings Plans Network and the administrator of Iowa’s 529 College Savings Programs including College Savings Iowa, with nearly $3 billion invested.

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