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529 College Savings Plan
Education is an expense that in some cases may rival the cost of your house and even your retirement. According to The College Board's 2010 annual survey, published tuition and fees at public universities and colleges increased 5.6% annually, with private nonprofit four-year institutions seeing a tuition and fee increase of 28% over the past decade.
A 529 College Savings Plan may help eliminate some of these worries. Contributions are made to a 529 for the benefit of an individual's higher education. In addition, investing in a 529 may help reduce your estate tax exposure, and when these funds are used for qualified expenses, distributions are not taxable.
Benefits of the 529 College Savings Plan include:
- Earnings grow federally tax-deferred until withdrawn
- Proceeds may be used at any accredited post-secondary school in the United States for part- and full-time education
- Beneficiaries receiving 529 income remain eligible for the HOPE scholarship and Lifetime Learning Credit in the same year
- The owner retains control over the withdrawals
- Contributions are invested in professionally managed portfolios, which are subject to market risk
- Earnings and withdrawals for qualified education expenses are free from federal tax
- Contributions can be made to both a Coverdell Education Savings Account and a 529 Plan in the same year
- There are no income limitations
See the Educational Savings Comparison Chart or contact your financial advisor today.
KIS does not give tax or legal advice. The comments regarding tax treatment in this material simply reflects our understanding of current interpretations of tax laws as they apply to the products covered in this material. Since tax laws are always subject to interpretation and possible changes, we recommend that you seek the counsel of an attorney, accountant or other qualified tax advisor regarding these matters as it applies to your particular situation.
Please read the Plan Disclosure Document and consider the investment objectives, risks and charges, tax treatment, and expenses associated with municipal fund securities before investing. More information about municipal fund securities is available in the issuer's official statement. The official statement should be read carefully before investing.
Most 529 Plans will accept both "in-state" and "out-of-state" applicants. Each state's 529 Plan must be evaluated based upon its own merits relative to your needs, and the tax effects on the contributor and the beneficiary. Plan holdings could reduce the beneficiary's ability to qualify for grants and student loans.
Withdrawals for something other than qualified higher educational expenses may be subject to federal and state income taxes and a 10% IRS penalty on earnings. You should consider many factors before deciding which 529 Plan is most appropriate. Some of these factors include: the Plan's investment options and the historical performance of these options, the Plan's flexibility and features, the reputation and expertise of the Plan's investment manager, Plan contribution limits, and the federal and state tax benefits associated with an investment in the Plan. You should discuss the tax implications of 529 Plans with your legal and/or tax advisors, as features may vary significantly from state to state. While federal tax treatment of 529 Plans is identical regardless of the state Plan, state tax treatment varies. State tax treatment may vary for "in-state" and "out-of-state" residents. Generally, state tax laws affect the contributor by way of deductibility of money going into the account, and the beneficiary and/or contributor by way of the possible taxation of distributions coming out of the account.
Investment products are offered through Key Investment Services LLC (KIS), member FINRA/SIPC. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA). KIS and KIA are affiliated with KeyBank National Association (KeyBank).
Investment and insurance products made available through KIS and KIA are:
KIS, KIA and KeyBank are separate entities, and when you buy or sell securities and insurance products you are doing business with KIS and/or KIA, and not KeyBank.