With the cost of a college education continuing to escalate, many investors are taking advantage of a flexible college savings strategy that allows them to invest money on a tax-deferred basis. 

Named after the section of federal tax code that governs them, §529 College Savings Plans provide a tax-efficient means that can help meet the expenses associated with an advanced degree.

Anyone can open an account, at any time, for the benefit of anyone they wish—a child, grandchild, relative, friend—even themselves! Control of the assets remains with the contributor, so the accumulated funds are sure to be used as the sponsor wishes. And, if the beneficiary chooses to forego college, the account owner may change beneficiaries¹ or withdraw² the assets.

Although the rules vary from state to state, contribution minimums may be low, while the maximum amount allowed over the life of the account can be quite sizeable—more than $150,000 per student under many plans. Earnings are treated as tax-deferred until withdrawal. This way, taxes will not erode your account, allowing more of your savings to work for you over time. What’s more, when assets are withdrawn for qualified higher education expenses, the earnings are federal income tax-free!³

The plan's returns fluctuate based on the performance of their underlying investments. Most plans offer a range of portfolios that include equity and fixed income investments.

Funds accumulated within a §529 plan can be used for tuition, fees, room and board, books, supplies and equipment necessary for enrollment and other qualified expenses at many accredited U.S. institution of higher learning.

§529 plans offer significant benefits 
for investors seeking to fund a college education:

Convenience and Flexibility
A §529 College Savings Plan account can be opened and funded at any time. The account can be started with an initial lump-sum contribution, (modest or significant) and contributors can make regular or occasional contributions as they please. Anyone (parents, grandparents, friends, even the intended beneficiary) can establish a §529 account and anyone can contribute to the account once it is opened.

Tax-deferred Treatment⁴ of Earnings and Tax-free Distributions³

Investment choices
Choose from a selection of professionally managed portfolios offered by a variety of prominent mutual fund companies.

Control of Assets
The account owner retains control of the assets and determines how the investment is used. The beneficiary can be changed¹ or assets can be withdrawn².

No income limits or restrictions 
Anyone, at any income level can establish or contribute to a §529 account.

Generally low minimum investments

Varying contribution limits

Special gift and estate tax treatment⁵
Account owners can give up to five years of contributions in a single year to each beneficiary without gift tax consequences. Also, contributions are generally excluded from your taxable estate for federal estate tax purposes, provided you are not the beneficiary on the account.¹

Start Now.
It’s never too early to start a college savings program. I can help you set up a §529 plan, and guide you in developing a comprehensive investment strategy designed to help you achieve your financial goals. 

¹The new beneficiary must be a member of the original beneficiary’s family. The beneficiary cannot be changed to the donor. There may be federal gift or generation skipping transfer tax consequences if the new beneficiary is a member of a lower generation than the original beneficiary.

²Federal income tax on the earnings and a 10% penalty may apply.

³Distributions for qualified education expenses made after December 31, 2001 are federal income tax free. As with all tax-related decisions, consult with your tax advisor.

⁴Legend Equities Corporation does not render tax or legal advice. Consult your tax advisor or attorney for tax and legal advice specific to your situation.

⁵Subject to an "add-back rule" in the event of your death within 5 years.