By Alyson Luszcz, Co-Chair of CSPN’s Data, Operations & Technology Committee and Lead Manager, College Savings Intermediary Operations at T. Rowe Price.
December 6, 2022
The leaves have fallen and the air has turned crisp with winter approaching. Bellies are full from a Thanksgiving feast with family. Black Friday shoppers have been out in force. Holiday decorations are going up in neighborhoods and all-around town. The holiday season has begun!
Are you trying to decide on that perfect gift for your child, grandchild, niece, nephew, or other loved one who already has toys galore? Consider a contribution into a new or existing 529 Education Savings Plan. 529 plans are tax-advantaged investment plans designed to help families save for a beneficiary’s future education expenses and are administered by state agencies and organizations.
Your state may also offer financial and other incentives for making contributions into a 529 plan which can make your gift stretch a bit farther. CSPN recently conducted a comprehensive review of the many ways plans helped families save for future education needs in 2021 – including financial incentives and matching grants, removing barriers to saving, providing tax incentives, and establishing innovative partnerships with nonprofits and universities to help families save for the future.
Some key findings in the study include:
- 529 plans provided nearly $42 million in matching grants, initial deposits, and other financial incentives to lower-income families, first-time savers, and others to help more families get started with education savings.
- 529 plans provided consumers with at least $464 million in tax incentives and other higher education benefits tied to 529 contributions.
- Partner organizations, including higher education institutions and nonprofit children’s savings or college access programs, made more than $7.3 million in contributions to 529 accounts and provided another $217 million in tuition discounts to 529 savers.
- Programs are making it easier to save. There are wide range of non-monetary ways that states use to make it easier to open and save in 529 accounts, such as low or no minimum initial deposit limits, multiple ways to make deposits, providing 529 plan materials in multiple languages, and offering financial education. Every state surveyed has instituted one or more efforts to make it easier for families to save in or open 529 accounts.
Check out your state’s 529 plan website to see what types of incentives are offered in your state. To get started, review specific state plans by visiting “Find My State’s Plan” by clicking here.
Pursuing postsecondary education may not be cheap, however the gift of education is a meaningful one that can provide a lifetime of rewards for your loved one. And, with a bit of research into what your state is doing to help families like yours save, it can be a very attainable goal!
Wishing you and your families a joyful and happy holiday season!
About the Author: Alyson Luszcz is Co-Chair of CSPN’s Data, Operations and Technology Committee and Lead Manager of College Savings Intermediary Operations at T. Rowe Price. T. Rowe Price has been helping families save for education for over 20 years. https://www.troweprice.com/personal-investing/products-and-services/college-savings-plans.html