Cook Wealth Management Group

Back to School – Is it Time to Save with a 529 Plan?

As your kids gear up for back-to-school, you may be thinking, “I can’t believe they’re already in __ grade.” Unfortunately, time flies, and, you guessed it, they grow up fast. As you equip your children with the knowledge and street smarts they need to be independent, remember what else they need to make it on their own: an education and the cash required to get it.

For those of you who assume you can’t afford to put money away for your child’s college education, the possibilities of a 529 Plan may surprise you.

529 Defined

Named after Section 529 of the Internal Revenue Code that created these types of savings plans in 1996, a 529 is “an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs.”1

Tax Benefits

Enjoy tax-free withdrawals for higher education expenses, such as room and board and tuition, as well as supplies, like textbooks or a laptop.2

Tax deductions are also a big help. North Carolina’s 529 plan in particular allows a tax deduction for contributions up to $5,000, and the option to focus on conservative investments – a great feature for new plan owners with kids already in high school.3


You choose the beneficiary.

You may set up a 529 Plan for a friend or a niece or nephew – any beneficiary you choose – and you can change the beneficiary if needed.2 In addition, there is no age requirement – a newborn or high school senior may be a 529 beneficiary.

You choose the school.

As long as the college attended is qualified, (a majority of institutions are eligible – see a list here) there are typically no other restrictions, like state of residency, college location, or state from which the plan is provided.  Just be sure to discuss this with your financial advisor and confirm eligibility long before class enrollment.1

You determine the amount.

What can you afford? Monthly, quarterly, $50, $400? Allow your advisor to help you decide on the numbers that work best for you.

While you’re still packing school lunches, pack away some cash in a 529; you won’t regret it.

How much should you save?