Pay for College Starting with 529 Day

KENTWOOD, Mich. - May 29, 2014 - PRLog -- According to an ancient Chinese philosopher, "the journey of a thousand miles begins with one step." The same philosophy applies to paying for college. For many families, their first step is opening a 529 College Savings Plan – a tax-advantaged way to save for college.

May 29 (aka 5/29) is nationally celebrated as 529 Day. It's an ideal reminder to start or add to a 529 plan or other savings vehicle.

Start Today
The earlier you start saving, the more time your money has to accumulate. If you’re eligible for a state tax deduction or credit, you may be able to recoup some of your contribution on your taxes.

Invest Regularly
It's not a true journey if you only ever take one step. It's important to make regular contributions to your plan to continue growing your investment. Many people choose to set up automatic monthly contributions.

Expand Your Sources
There are many creative sources of income for your education savings. Consider boosting your contributions with tax refunds and work bonuses. You can also look for ways to reallocate funds: When your children enter elementary school, redirect any money spent on day care. Or when the braces are paid off, tap into that money.

Finally, consider asking family and friends to contribute to your child's education savings for holidays, birthdays and other milestones. Grandparents, in particular, may be able to realize tax advantages in their estate plan by gifting to their grandchildren in this way.

With 529 Day right around the corner, take a minute to think about ways to save for your children or grandchildren. Their first day of college (and the costs associated with it) will be here sooner than you think. Visit your Edward Jones financial advisor for help in developing an education savings strategy that works with your situation.

Withdrawals from 529 plans that are used for expenses other than quali¬fied education expenses may be subject to federal and state taxes plus a 10% penalty.

Contributions may be state tax-deductible or eligible for a state tax credit in certain states for taxpayers who participate in their home state's plan.

Special gifting provisions allow a contribution of $70,000 (single ¬filer) or $140,000 (joint filers) in a single year. The contribution will represent a gift of $14,000 ($28,000 for joint ¬filers) for the current year and for each of the next four years. In the event of the contributor’s death within that ¬five-year period, the portion of the original gift allocated to years following death will be considered part of the estate for estate tax purposes.

Edward Jones, its employees and ¬financial advisors cannot provide tax or legal advice. You should consult your attorney or quali-fied tax advisor regarding your situation. Tax issues for 529 plans can be complex. Make sure to discuss the potential ¬financial aid impacts with a ¬financial aid professional.