Education Savings: The Gift That Keeps on Giving
December 18, 2019
Each year, an American child receives gifts with an average total value of $330.1 What if just one-third of those dollars were instead gifted to a 529 account until the child reaches college age?
1RetailMeNot Consumer Survey, October 2017, http://retailmenot.mediaroom.com/2017-10-12-New-Survey-Finds-54-of-Consumers-Will-Begin-Holiday-Shopping-Before-Black-Friday.
2College age is defined as age 18 for the purposes of this hypothetical illustration.
This hypothetical illustration assumes that the year is 365 days, interest will be compounded annually, and interest begins accruing instantly. These values reflect the total savings as of the specific day of deposit each year. For example, if a deposit is made on January 4, 2019, 3 years to college will reflect the total savings as of January 4, 2022. The inflation rate remains 0% each year. The 5% annual rate of return remains constant each year. No fees are applied throughout the entire duration.
Before investing in any 529 plan, you should consider whether your or the designated beneficiary’s home state offers a 529 plan that provides its taxpayers with state tax and other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in the state’s 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. Investment objectives, risks, charges, expenses, and other important information are included in a 529 plan’s offering statement; read and consider it carefully before investing.
An account in a 529 plan is controlled by the account owner. Your gift contribution may have gift tax consequences or other tax implications. Please consult your tax advisor.
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