This holiday season, invest in the kids you love. Hint: It’s not the latest toy or gadget that will get five minutes of fame, then clutter the house. We’re talking about one of the most meaningful gifts you’ll ever give…the gift of higher education. Opening or contributing to a 529 College Savings Plan opens the door to endless possibilities.
Here are 5 fast facts to understanding 529 Plans:
- What’s a 529?
It’s an education savings plan to set aside funds for future college expenses at any accredited school across the country. A big advantage to 529s – you don’t pay tax on the growth of the account and qualified withdrawals are also tax-free when it comes time to use the funds to pay for tuition, text books, laptops and more. That means more money in your pocket.
- Who can open an account?
Parents, grandparents, aunts, uncles, friends…you name it! As the account owner, you also can take advantage of tax deductions at the federal and state level.
- How do I invest?
You don’t need to be a financial expert to open an account and choose an investment track. You can select a pre-determined track based on your child’s age and risk tolerance (conservative, moderate or aggressive). You automatically move to a more conservative track as your child gets older.
- What’s key to maximizing savings?
Save early and often. The earlier you start saving, the more chance your money has to grow and compound over time. Consistent, recurring contributions (e.g, monthly automatic deposits into your account) also pays off in the long-run.
- How do I open an account or learn more?
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. or any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
The earnings portion of non-qualified withdrawals is subject to federal and state income taxes and 10% federal penalty.
Before investing, carefully consider the plan’s investment objectives, risks, charges and expenses. This information and more about the plan can be found in the Learning Quest Handbook, available by contacting American Century Investment Services, Inc., Distributor, at 1-877-345-8837, and should be read carefully before investing. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary’s home state offers a 529 plan that provides its taxpayers with state tax and other benefits not available through this plan.
As with any investment, it is possible to lose money by investing in this plan. The value of your Learning Quest account may fluctuate, and it is possible for the value of your account to be less than the amount you invested.
Notice: Accounts established under Learning Quest and their earnings are neither insured nor guaranteed by the state of Kansas, the Kansas State Treasurer or American Century Investments.
Administered by Kansas State Treasurer Ron Estes
Managed by American Century Investment Management, Inc.
Learning Quest | P.O. Box 29202 | Shawnee Mission, KS 66201-9202