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| | The Section 529 college savings plan
The Section 529 plan is a fantastic way to save for college costs.
Parents, grandparents, etc. can set up a plan for a child's future education
needs. These are some of the incredible advantages:
- All earnings (including any interest, dividends, and growth) will be free of
Federal and Maine income taxes as long as they are used
for qualified educational purposes.
- Even though contributions are removed from your estate for estate tax
purposes, you still retain control of the account and can change the
account beneficiary or withdraw money if the child does not attend
college. This is unlike the UGMA (Uniform Gift to Minors Act) where you
lose all control and the child has ownership of all funds at age 18.
- Special gift tax treatment allows you to transfer up to $55,000 (or $110,000 if married) per beneficiary in a single year without federal gift
tax consequences, as long as you do not make additional gifts to the
beneficiary over a 5 year period (this would preclude any
additional gifts, not just contributions to a Section 529 plan).
- There are many choices for 529 plans. The State of Maine's plan is
called Next Gen. It is our
understanding that you can use any state's section 529 plan and still pay
no federal or Maine taxes.
- To maximize your college savings, consider registering with
Upromise.com.
You can link your credit and debit cards to your section 529 plan (only
certain plans can be directly linked to your Upromise account) and
selected vendors will contribute a portion of your purchase into your Upromise.com
investment account.
As you can see this can be an unbelievable win-win-win-win situation.
Please contact us if you are interested in learning more about this tremendous
program or visit http://www.nextgenplan.com
for more information.
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