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For many parents, exploring 529 savings plans is a new venture. We created a quick guide so you know what to look for as you navigate the best educational savings plan for your child.
What is a 529 plan?
A 529 college savings plan is a tax-advantaged account for education expenses. These plans are usually state sponsored. The name “529 savings plan” comes from Section 529 of the IRS tax code, which gives this investment option special tax breaks to encourage educational savings.12
The Basics of 529 Savings Plans
Every parent has questions as they learn about 529 plans. The topics below give you a quick introduction into the key topics that will help you make the right decisions for your family.
529 plans are great for educational savings.
In many states, there are several tax benefits that can be received by opening a 529 savings account. Earnings have the potential to grow tax-free and qualified withdrawals generally are free from federal and state income tax.2 Learn how you can receive these benefits when investing in the Bloomwell 529 Education Savings Plan.
What’s a beneficiary?
A beneficiary is the student who will receive the funding from the 529 plan. An account can be opened for a child, grandchild, nephew/niece, friend, or even yourself. The beneficiary must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer identification number.
What happens if the beneficiary chooses not to continue education?
If the student chooses to go down another path, you have a few options:
- Leave the funds in the account in case your beneficiary goes back to school at a later date.
- Change the beneficiary to another member of the family for their education expenses.
- Withdraw funds as a non-qualified withdrawal. In this case, the earnings from your investment (not the amount you contributed) are subject to federal and state income taxes, a 10% federal penalty tax, and the withdrawal is subject to recapture of any Nebraska state tax deductions previously taken.1
529 plans are simple to set up and use.
529 savings accounts can be started by almost anyone. There are no income limits, and anyone can contribute – including friends and family members. You can use a 529 account to pay for qualified education expenses at most colleges and universities. These funds can also be used at technical, trade, vocational, and career schools as well. See how Bloomwell 529 Education Savings can help you save for college.
You don’t need to be an expert to get started.
Most 529 plans provide options for every level of investor. Before you start investing, review your options and consider the investment objectives, risks, and expenses. Interested in investing with the Bloomwell 529 Education Savings Plan? Read the Program Disclosure Statement to learn more on investing and other important information and visit our Investment Options page.
Bloomwell 529 Features
When you open an account with the Bloomwell 529 Education Savings Plan, you give your student several savings advantages that will give them more options for the future. See the features that make the Bloomwell 529 a better option than competing plans.Learn More about Bloomwell Features
Set Your Goals
Understanding how much your educational expenses may be is key to creating a smart savings plan. Get an estimate of how much you’ll need and when to start saving, so you can keep your family one step ahead.Learn More about College Costs
College Savings Calculator
Create your own college savings report based on your family’s situation. Input your information and you’ll see the total projected cost and estimated monthly savings amount you’ll need to get there.Calculate Your Savings about College Savings Calculator
Pick Your Path
Choose the investment options that best fit your needs, risk tolerance, and comfort level. Then, enjoy the flexibility to change your selections up to twice every year, as your situation changes.Learn More Learn More about Investment Options
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