529 - The Three Numbers Parents Need to Know for College

Sending children to college can be one of the most rewarding experiences of a parent’s life. The excitement of watching your son or daughter start a new journey, coupled with the promise of all the wonderful things they’re going to learn can bring immense joy. Knowing that the next few years will be a transformative experience, parents try to prepare for the road ahead as best they can. But let’s face it, the prospect can be a bit overwhelming. The cost of college has been rising steadily for decades. This is why parents need to know about the 529 plan!

According to a recent article by CNBC, since 1988, college tuition has increased a whopping 213 percent – from just $3,190 in tuition per year up to $9,970 for a public four-year university. This massive hike in education not only has students on edge, but parents as well.

Saving for a four-year school takes time, energy and most importantly, money. While there are scholarships, grants, loans and other federal and state programs, most families rely on savings accumulated throughout the years. Sometimes those savings are withdrawn from already planned retirement funds or even 401(K)s. Although these are great for retirement, these accounts often have tax penalties if money is withdrawn early. By sacrificing one investment for another, the price of saving for college proves to be too costly.

To help alleviate the financial burden on families, in 1996 Congress added Section 529 to the Small Business Job Protection Act. This would become widely known as the 529 Plan. This state sponsored tax-advantaged savings plan was instrumental in how families saved and payed for college.

We’ll get into the history of the plan and how it came to be in another post. Right now we’re focusing on why these three numbers need to be at the forefront of your college savings strategy.

U-Nest has you covered. We’ll be the one-stop shop for all things 529. We’ll help guide you through the process to select the best plan for your future graduate! Let’s review some of the incredible features and benefits the 529 offers:

- Federal income tax advantages

- State tax benefits

- Gift tax benefits

- No income limitations

- Investment benefits

- Asset protection

Essentially the 529 plan acts as a college savings account with amazing federal and state tax advantages. Think of it this way – let’s say you deposit $10,000 into a 529 Plan when your child is one year old. That deposit will grow tax free over the life of the account. This means that you will not be subject to annual income taxes. Additionally, most states offer multiple plans and parents can choose the plan they wish to enroll in.

As mentioned at the beginning of this post, the cost of education is on the rise. According to the College Board, “Between 2007-08 and 2017-18, published in-state tuition and fees at public four-year institutions increased at an average rate of 3.2% per year beyond inflation, compared with average annual increases of 4.0% and 4.4% over the two prior decades.” This continued rise is expected to grow about 5% - 6% annually. While most investment options lag behind the increase, a 529 Plan can have higher growth numbers to match that rise.

Now, the thing about 529 plans is that there are a lot of them. This can become overwhelming for parents who aren’t financially savvy or don’t have the time to comb through each and every plan to find the right fit. That’s where U-Nest comes in.

U-Nest simplifies the process and makes selecting a plan fast, easy and hassle free. The entire process takes place in the palm of your hand and can be completed by anyone - a parent, grandparent or any other guardian.

By using the U-Nest application, you can provide your child with the bright future they deserve. We’ve used bank-level encryption to personalize a savings plan for each individual child or beneficiary. The savings you put in today can be used for a multitude of educational opportunities, including:

- K-12 (tax-free withdrawals up to $10,000 per year)

- College Tuition

- Room and Board

- Books

- Supplies

- Computers

For as little as $25 per month, you can ensure that your kids achieve their dreams. For more information, visit our info page atwww.u-nest.com/faqs.

The U-Nest application is set to launch soon. If you’d like early access, please register your email address with us at www.u-nest.com

This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.