July 26, 2018

College tuition costs continue to rise, making college savings a must. A 529 plan is a tax-advantaged savings plan designed to pay for future education costs. With a little planning, a 529 plan could be a way to help pay for college expenses and could benefit you and your family in these four additional ways. 

1. Grows free from federal taxes

When you use a 529 fund to pay for qualified higher education, earnings are free from federal income taxes.

2. Affordable

Unlike other mutual funds, CDs or certificates, you can typically open a 529 with as little as $25. Fees vary depending on the state and plan. Do your research to help make sure that as much of your money as possible is going to your child’s future. 

3. Other family members can help

Once established, other family members or friends can make gifts to your 529. Instead of a baby, birthday or graduation gift, ask family to gift $25 to the child’s 529 plan, helping contribute to his or her future.

4. Funds can be transferred

If your child doesn’t need all the money in the fund or changes their education plans, funds can be used for your own education or transferred to another qualified family member without penalty. Consider supporting future generations by keeping the fund open for grandkids and great grandkids. 

While there are many benefits to a 529 plan, it’s important to note that these investments are not guaranteed nor are they covered by FDIC or NCUA insurance. As an investor in this type of plan, you will have the ability to determine what type of mutual fund you’d like to invest in, and you may change investments as stated in the fund prospectus. Depending on the mutual fund or funds you select, your investments could be subject to stock or bond market risks, also stated in the fund’s prospectus. Always review the prospectus prior to investing. 

If you are curious whether or not a college savings plan might be a good option for you and your family, give me a call. As the financial advisor through CUSO Financial Services, L.P. (CFS) at 1st United Credit Union, I can help you develop a college savings plan that meets your needs. I’m available to talk by phone or I’d be happy to meet you at any 1st United branch. Schedule your appointment today.

Brought to you by...

Rahil Machiwalla
CUSO Financial Services, L.P.*
Financial Advisor
(925) 598-4718
CA Insurance Number: 0G20361

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If withdrawals are used for purposes other than higher education, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should consider investment objectives, risks, and charges associated with Section 529 plans prior to investing. Contact your investment representative or carrier for more information about municipal fund securities which is available in the issuer’s official statement or plan disclosure document which should be read carefully prior to investing. Most 529 plans are sponsored and administered by states. State tax benefits vary among the states, and some offer residents additional tax benefits if they invest in their own state plan. Consult your tax advisor for more information. Consult a qualified tax professional for more information.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the Credit Union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to Credit Union members. Please consult a qualified tax advisor for specific tax advice.