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529 Plans

You may be able to save $200,000 or more per child through a state-sponsored investment account. All earnings are tax-deferred. The child can use the money, tax-free, to pay for qualified* higher education expenses.

What is a 529 Plan?

A 529 Plan is a state-sponsored funding vehicle to help families save for qualified higher education expenses for designated beneficiaries, while realizing tax savings.

What are the advantages of a 529 Plan?

  • Your investment has the potential to grow tax-free while the money is in the plan
  • Qualified distributions are federally tax-free. The donor is in control of the account; the beneficiary has no access to the money
  • Ongoing investment of the account may be handled by the plan in an age based or static portfolio
  • Generally no income or age restrictions for the donors of beneficiaries
  • Can be used for any higher accredited education institution in the U.S.
  • May have less impact on financial aid - not considered a student asset
  • Beneficiary and investment direction may be changed once per year
  • May have state tax benefits

What are the disadvantages of a 529 Plan?

  • Limited to plan's investment options
  • Generally higher expenses
  • 10% penalty and earnings taxed for nonqualified withdrawals
  • Only available for qualified higher education expenses
  • Contribution limits determined by states
  • May not be protected against creditors
  • State tax benefits are generally limited to the in-state plan

Questions

If you have questions, please find a local sales office.

 

*Qualified expenses include tuition, fees, room and board, books and other supplies needed for attendance of a student at an institution of higher education.

Before investing, you should carefully consider the investment objectives, risks, charges, expenses and tax treatment of 529 Plans. Contact your financial professional, to obtain prospectus(es) and a program description containing this and other information. Read carefully before investing.

You should discuss the tax implications of 529 plans with your legal and/or tax advisers, as features may vary significantly from state to state.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Investment and insurance products are: not a deposit · not FDIC Insured ·
not insured by any federal government agency · not a bank guarantee · and may lose value.

Have a question? Call us at 1.800.986.3343

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