529 college plans are state sponsored education savings accounts that permits non tax deferred contributions to be made for college education tuition expenses.

Each state will set their own limit for contributions into a 529 plan. The earnings in the investment plan account grow and are distributed tax free when they are used to pay for college or other qualified higher education instutions.

Saving for college can be very difficult for many people. With the cost of housing, taxes and other expenses growing with most people, having the 529 savings plan option can give a family a certain measure of comfort knowing they are saving for college. The amount of money that grows in the 529 will vary with the performance of the investments in the account.

Our financial advisors, planners and broker dealers can provide more information and open a savings plan for you or your child.

Qualified State Tuition Programs

There are 2 types of plansor accounts : a pre paid tuition and a savings plan. Prepaid tuition plans guarantee that the investment will at least keep pace with college education tuition expenses.

529 Savings plans are managed investment funds that can be more flexible. The income in these qualified plans is not taxable. Funds used for college tuitions can be withdrawn and are also not taxable.

Tax free rollovers from one 529 plan to another are allowed for the benefit of the same beneficiary once per year.

New Rule

Under federal law, college savings are permitted to allow investors to change the investment options on their existing contributions once per calendar year. Industry observers have criticized this "once-per-year" rule as too inflexible, especially in a down market year like 2008. The IRS has recently published a notice addressing this issue. For 2009, according to the IRS, 529 college savings plans may allow investors to change the investment options on their existing contributions twice per year instead of once per year. Check with your 529 account to see if it offers this new investment flexibility before you make any changes.

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