Thursday, September 29, 2011
College Savings Month: Benefits of Iowa's 529 Plan
The high cost of higher education continues to rise.
But Iowa's 529 plan gives families a head start on saving for college.
Here are five ways the College Savings Iowa plan can benefit Iowa families:
- Every $1 you put away for college offers the potential to save you from borrowing $3.
- Your assets grow tax-deferred, and withdrawals are exempt from federal income tax and Iowa state income tax when used for qualified higher education expenses. Earnings are fully exempt from Iowa state income tax. Iowa taxpayers can deduct up to $2,865 in contributions per beneficiary account from their adjusted gross income for 2011. For example, a married couple with two children contributing to separate accounts can deduct up to $11,460 (that's 4 x $2,865) in 2011.
- The plan offers several investment options, including age-based savings tracks that reallocate your savings over time to more conservative investment options as the child nears college age.
- The plan offers low investment costs.
- Participants can take advantage of Upromise, which enables families to earn cash rewards from their everyday spending. The free service helps you save for college by returning a percentage of your spending at hundreds of companies, including McDonald's, ExxonMobil and many supermarkets.
By Emily Kittle