New 529 College Savings Plan Offers Many Benefits
By Chris Gibson, Resident Moneta 24121

 With tuition rates on the rise, thoughts of saving for your child or grandchild’s college education may send shivers down your spine. But it doesn’t have to be a frightening experience. New investment alternatives and tax laws are making it easier to plan ahead.
 One of the latest developments in education planning is the 529 college savings plan. This alternative offers several advantages that others do not. The benefits vary from state to state, but the following may be used as general guidelines for 529 plans:
 • Tax-free earnings. The earnings on these investments grow tax-free - much like a Roth IRA.
 • Any institution in the U.S. Your fund assets can be used at any accredited institution of higher learning in the U.S.
 • Contributions excluded from taxable estate: Funds contributed are immediately excluded from your taxable estate. However, you still retain the right to determine how the account is used. In addition, benefits do not automatically transfer to the beneficiary when he or she reaches a specified age. The owner of the account controls all withdrawals, ensuring the funds are used for educational purposes.
 • Contributions eligible for gift tax exclusion: You may generally contribute up to $50,000 per beneficiary in a single year without federal gift tax consequences.
 • High contribution limit: You can contribute to your account until the total account value equals $246,000 (contributions and earnings).
 • Unlimited eligibility requirements. Anyone, regardless of age, may be named as beneficiary to the account. Should the beneficiary not need the funds, or if an excess of funds remains after paying for college, the account may be transferred to certain specified relatives of the original beneficiary.
 Of course, with any type of college-savings program, there are considerations. Assets placed in a 529 plan should be used for education, as nonqualified withdrawals can be penalized up to 10% on earnings.
 Chris Gibson is a financial advisor with Raymond James Financial Services, Inc. at Westlake Corner. He may be reached at 540-721-0211 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .