Saving for college with 529 plans
529 plans were created by Congress in 1996 and are named after Section 529 of the Internal Revenue code—the legal name is “Qualified Tuition Program.” These plans ease the ability to save for post-secondary education for a beneficiary by providing tax advantages and other incentives.
A 529 plan can be established in any state and anyone can be named as a beneficiary—a relative, a friend, even yourself. There is no limit to the number of plans you set up. Like any investment,* you should shop and compare before starting.
There are over 100 different 529 plans in the country, but the two basic types of plans are prepaid tuition and savings. States are permitted to offer both types, and each state has its own unique plan. A qualified education institution can only offer a prepaid tuition 529 plan.
Northwest customers in Maryland, New York, Ohio and Pennsylvania have the following options within their individual states:
Pennsylvania’s 529 investment plan is managed by the Pennsylvania Treasury Department. Its record-keeping and investment services are provided by Upromise Investment Advisors LLC and The Vanguard Group, respectively. The investment program features three age-based options and 10 static options, including a socially responsible equity portfolio, using Vanguard-managed portfolios.*
The guaranteed savings plan is available only to Pennsylvania residents. It functions as a unit-type prepaid tuition plan, providing protection against increasing tuition costs in various institutional categories.
Maryland offers both a direct-sold 529 college savings plan and a prepaid tuition program. The savings program is managed by T. Rowe Price and offers age-based and static options using the firm’s mutual funds.* Enrollment in the prepaid tuition program is open to account holders or beneficiaries who are residents of Maryland or the District of Columbia at the time of enrollment.
Ohio operates two 529 college savings plans. The direct-sold Ohio College Advantage 529 Savings Plan is available to residents of any state, offering certificates of deposit and savings accounts from Fifth Third Bank, in addition to a menu of options using mutual funds* from Vanguard, PIMCO, Oppenheimer Funds and GE Asset Management.
The BlackRock CollegeAdvantage plan is advisor-sold and features BlackRock funds in age-based and asset-allocation options, along with several options (individual and mutual fund*) from iShares.
Ohio’s prepaid tuition/guaranteed savings plan (Guaranteed Savings Fund) is closed to new enrollments pending action by the Ohio Tuition Trust Authority.
New York has two 529 savings programs: a direct-sold plan featuring Vanguard mutual funds,* and an advisor-sold program featuring funds from JP Morgan and SSgA. Both New York 529 plans are managed by Upromise Investments.*
If you want to take advantage of 529 plans, our financial professionals at Northwest can help you find the program that is best for you. Call us at 1-877-300-3454 to set up an appointment today.
* Investments: Not FDIC Insured. Not Bank Guaranteed. May Lose Value.