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Where does a penguin keep his money? In a snow bank.

What did the hamburger name it’s baby? Patty.

What’s brown and sticky? A stick.

When I earned the title “Dad” after our first child was born, the realization that I am entitled to these corny puns was not lost on me. After our fourth child was born, I thought, “This means I am allowed four times the dad jokes, right?” According to my wife… wrong.

But one thing we could agree on? Our commitment to saving for our children’s education.

All jokes aside, being raised by teachers, I understood the importance of education for personal and professional growth. But I also know it’s expensive, which is probably why the start of a Google search for “Is college…” usually ends with “…worth it?” It’s also why my wife and I knew the answer to getting ahead of the cost was opening a 529 account for each of our children.

And you can, too. These investment accounts are an easy way to help the children in your life reach their education goals and help you reach your financial goal to get them there. Here’s how:

529 plans…

  1. Help families save for the costs of education, including K-12, college, graduate, and vocational tuition and fees; books and supplies; student loan payments; room and board; computers; and more
  2. Provide federal (and state, depending on the plan) tax-advantages, including tax-deferred earnings and tax-free qualified withdrawals
  3. Can be opened by anyone, including parents, grandparents, other relatives, and friends
  4. Give control to the account owner since they decide where, when, and how the funds are used, no matter the student’s age
  5. Offer flexibility if the student decides to forgo or postpone their higher education, including the ability to transfer funds to an eligible family member with no penalty

Intrigued? Start researching the right plan for you with CSPN’s 529 Search and Comparison Tool. From there on out, it’s all about rolling with the punchlines until it’s time to use your hard-earned savings. Easy as pie!

About the Author

Iowa State Treasurer Roby Smith is the administrator of Iowa’s 529 Education Savings Programs, College Savings Iowa and the IAdvisor 529 Plan, with over $6 billion invested and more than $5.1 billion in qualified withdrawals.

By Paula Smith, Senior Vice President, Product Strategy and Development – Retirement and College Savings, Voya Investment Management

Having access to higher education has been a transformative experience that has profoundly shaped my life. The opportunity to obtain a college degree opened an endless world of possibilities for me. Although my school was only four hours from my urban neighborhood, it felt worlds away.  

Fundamentally, as parents plan and save for their child’s education, they hope that he or she will not only build a fulfilling career but gain valuable knowledge and skills and a deeper understanding of the world around them. Parents also hope their child will acquire lifelong friends along the way. As I reflect on my own life lessons from my higher education experience, these really stand out:  

Independence: While initially being responsible for running most aspects of your life on your own may seem daunting, ultimately, it is empowering and builds confidence. Simple things like getting to class, learning to navigate other people and situations, and managing my time independently were invaluable lessons.   

Budgeting and Saving: Most college students are pressed to stretch the dollar. Through many part-time and summer jobs and careful planning, I was able to manage day-to-day expenses and plan for a significant trip after graduation. I have carried this lesson throughout my life.

Love of Learning: The journey of intellectual growth is never-ending, and there will always be new horizons to explore, new mysteries to unravel, and new ways of understanding the world around us. That lifetime love of learning has been the personal and professional fuel that will continue to propel me. 

Perseverance: The most important life lesson from higher education is maintaining a long-term outlook in the face of challenges. Grit is about doing what it takes to achieve personal goals.  

Gratitude: While this lesson arrived a bit later than the others, I am profoundly grateful for those who helped along the way: those who awarded scholarships and provided aid, my school and professors, and my parents, grandparents, friends, and other relatives. We simply can’t do it alone.

As I started my career after graduating, I began working with retirement plans and their participants, which was a perfect fit for my skill set and what inspired me. Helping people set goals, work to achieve financial independence, and get on a path to retirement was incredibly rewarding for me.    

Shortly after, I learned about 529 plans and was immediately fascinated by the elegance of these programs—how contributions are made and invested and, ultimately, how they are used to help parents pay for their child’s education.   

The primary objective of a 529 plan is to help beneficiaries access higher education. These programs provide many benefits. They are easy to open and fund, offer strong tax benefits and incentives to help people meet their savings goals faster, and offer flexibility if educational plans should change. As college costs have continued to increase, leveraging a 529 plan early and with purpose makes college more attainable.  

These plans have come full circle with the new Roth IRA rollover provision within 529. They now offer both the ability to help fund a college education and (if money is left over) give the beneficiary a head start on retirement savings.  

Today, I find it particularly rewarding to engage with advisors and participants about saving for college. Higher education has many positive ripple effects, opening doors to fulfilling careers and transforming lives. I am honored to play a role in changing the lives of young people—just as my own life was transformed—and helping to ensure the dream of a college degree is within their reach.  

About the author:

Paula Smith is Senior Vice President, Product Strategy and Development – Retirement and College Savings for Voya Investment Management, a wholly owned subsidiary of Voya Financial.  Voya Investment Management serves as 529 Program Manager for the Wisconsin Tomorrow’s Scholar® 529 program and the Iowa IAdvisor program. She has over 20 years’ experience working with retirement plans and 529 programs. 

By Trisha Good, Executive Director, Ohio Tuition Trust Authority

May 29, 2024

I am a firm believer in the power of saving in a 529 plan as my family has personally experienced its benefits. My husband and I saved in 529 plans for our two children’s education and career training after high school. With the help of our extended family, they both graduated from their respective colleges DEBT FREE! And now, I am saving for my two wonderful grandchildren for their future education.

As we celebrate May 29 as 529 Day, I want to share the many reasons why my husband and I chose to save in a 529 account.

529 tax benefits

All earnings in a 529 plan are tax-free, so all investment growth is yours to use for higher education expenses. Compound interest—the interest earned on contributions, earnings, and interest already accumulated in the 529 account—is included in your 529’s tax-free earnings.

529 plan withdrawals for qualified higher education expenses are also tax-free at schools that accept federal financial aid. These costs include tuition; room and board when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student. Room and board costs can also include rent for off-campus residencies—apartments, rental homes, and Greek fraternities and sororities’ houses—and groceries (non-taxable items only), provided these costs are equal or less than the school’s room and board allowances. 529 plans can also pay for fees, textbooks, supplies, and equipment, including required trade tools for registered apprenticeships.

Many states also offer tax deductions or tax contributions for contributions made to the state’s 529 programs. If you want to see your home state’s benefits and tax information, CSPN has a great tool to review your state’s program and compare it to others.

Use at many kinds of schools!

529 plans can be used for your child’s education and career training after high school – whether for a two-year, four-year, graduate degree, certificate programs, registered apprenticeships programs, or any other post-secondary credential. This list includes community colleges and technical schools, vocational or trade schools, graduate schools, and even some study-abroad programs. If the school has a Federal School Code with the Federal Student Aid, an office of the U.S. Department of Education, then you can pay for qualified costs there with a tax-free 529 withdrawal.

Others can help save

As the adage says, “It takes a village to raise a child.” When loved ones asked us for gift ideas for our children, we asked for contributions to their 529 accounts for their future. Most contributions to a 529 plan can start as low as $10-$25. Also, many 529 programs offer gifting platforms that allow trusted

family members and friends to make online gift contributions directly to your children’s 529 accounts without needing the actual account number.

529 flexibility

Not only can you use your 529 account for post-secondary education expenses, but you can also use it for K-12 tuition at a public, private, or parochial elementary or secondary school. This means your education saving account can cover many costs for elementary, secondary, and post-secondary education. The 529 withdrawal limit is $10,000 per year to pay for K-12 tuition. Consult your qualified tax advisor for specific information.

Families can also pay for a student loan that qualifies for the federal student loan income tax deduction with a 529 distribution. There is a $10,000 lifetime limit for the beneficiary of a 529 account. Another $10,000 can repay the qualified student loans of the beneficiary’s siblings.

At the start of 2024, a new tax-free qualified distribution was added to 529 accounts. Now, any remaining funds in a 529 account can be rolled over into a Roth IRA for the same beneficiary as the 529. There are prerequisites that must be met to use this new qualified distribution. Consult your qualified tax advisor for specific information.

There’s a lot to celebrate about 529 plans on 529 Day. After all, any investment in a 529 plan is an investment in your child’s future. To learn more about 529 higher education saving plans, please visit CSPN.

About the author:

Trisha Good is the executive director of Ohio Tuition Trust Authority. Since 1989, Ohio Tuition Trust Authority has sponsored and administered Ohio’s 529 College Savings Program, CollegeAdvantage. Ohio’s 529 Plan oversees nearly 675,000 accounts and over $17.22 billion in assets as of March 31, 2024. Visit CollegeAdvantage.com or call 1-800-AFFORD-IT (233-6734) for more information.

Marilyn Whitney, Executive Director, IDeal – Idaho College Savings Program

May 1, 2024

During the week of May 6, the National PTA celebrates Teacher Appreciation Week. This year, the theme is “Teachers are Shining Stars!” This is an opportunity to show your appreciation for the vital role teachers play in the lives of our students. Whether it is at the pre-school, K through 12, or post-secondary level, teachers deserve our recognition and thanks.

I was fortunate to have many amazing teachers all through my educational experience. From my first-grade teacher, Mrs. Herzinger, to my high school mentor, Mrs. Franden, and my college advisor, Dr. Clark, I was encouraged, supported, and motived, especially when I faced challenges and setbacks.

These teachers were also instrumental in helping me on the pathway to college and through both my undergraduate and graduate programs. Many people credit a special teacher with influencing their decision to continue education after high school and pursue a given career. I had two high school teachers who not only took the time to talk to me about what I would study in college, they also helped me secure scholarships and student loans. I only wish my parents could have taken advantage of the tax benefits of saving for my college education a 529 account, which would have also minimized my student loan debt.

My high school teachers also influenced my decision to study education. While I taught for only a few years, I remember how demanding the job can be – from preparing lessons, to parent-teacher conferences, and the never-ending task of grading papers. But I also remember the sense of satisfaction I felt when my students succeeded.

While I did not stay in the classroom, my career has always included a link to the education world, and I have continued to encourage parents and students to plan for their education goals, especially how to save to make sure they have the financial resources to achieve those goals. In my current role, I have the opportunity to educate families about saving with IDeal by sharing my experience of saving for my daughter’s college education through the program. And I am now saving with IDeal for my grandchildren’s education.

I absolutely believe that teaching is a noble career. In fact, my daughter has been a kindergarten teacher for the past five years. Her first year was interrupted by the COVID pandemic, and I will never forget how heartbroken she was not to be able to finish the year with her kids. Thankfully, we all got through that difficult period, and I have a new appreciation of how important teachers are in our lives.

The National PTA has a “Thank a Teacher Toolkit” with some great ideas for showing appreciation to a special teacher:

This year as we celebrate Teacher Appreciation Week, take an opportunity to do something special for a teacher! I know from experience how meaningful it is to get a thank you note or to see or hear from a student years after they have left your classroom and learn what they have accomplished. Thank you to all the teachers out there! You truly are “Shining Stars”!

About the author:

Marilyn Whitney is the Executive Director of IDeal – Idaho College Savings Program. As of March 31, 2024, IDeal has 51,307 accounts with total assets of $821,745,426. Our client services number is 1-866-433-2533 and our local Idaho number is 1-208-332-2935.

John Hupalo, Founder and CEO, Invite Education

Starting March 17, college basketball’s March Madness will happily divert our attention from the current FAFSA Fiasco, student loans and other education issues.

Teams will be selected, brackets formed, games played and at least one Cinderella will likely emerge as a bracket buster. In that spirit, I sat down with my friend Patricia Robert, Chief Operating Officer of Gift of College, and author of Route 529, to talk about 529 Plans. One topic: busting the three 529 myths that bother us the most:   

The following is an edited excerpt of the full interview which can be found here.

JH:         What is #1 on your list of 529 myths?

PR:        529s are just for a four-year traditional college and if your child doesn’t go that route, it can’t be used at all. There couldn’t be anything further from the truth. There are so many options for which these plans can be used. The misunderstanding about the very broad use is something that I find really frustrating and I’m out to bust that myth.

JH:         How about another myth?

PR:         You have to be the parent of the account beneficiary to open the account. Not true. Grandparents, aunts, uncles, godparents, even friends and neighbors want to get started saving for a child they love. You do not have to be the parent to open the account.

JH:         For me, the myth that I hear that I most want to bust: “Someone told me that if I save for college, my child is going to get less financial aid”. Wrong!  Please talk to us about that.

PR:        It is a big misunderstanding that 529 accounts will have a significant adverse impact on federal financial aid eligibility. Not true. Only 5.64% of the account value will be considered in the current federal financial aid formula.

So, with $10,000 saved, aid eligibility will be reduced by $564. It is wrong to assume that saving is somehow not a good strategy. It is much better than holding out hope for financial aid, which largely often is student loans that need to be repaid. For federal financial aid purposes, set this worry aside.

___

In addition to myth busting, we also discussed recent FAFSA® changes that are very beneficial to 529 savers:

Although we touched on the expanded uses of 529 beyond college when we discussed myth 1, we later dove a little deeper into the many of the expanded uses in more detail including:

And, of course, 529 proceeds can now be used for certain expenses related to approved apprenticeships.

In closing, I’ll leave you with Invite Education’s two favorite phrases:

About the author:

John Hupalo is the founder and CEO of Invite Education.

By Roby Smith, Iowa State Treasurer

February 13, 2024

Ahhhh, love! Nat King Cole had it right: “‘L’ is for the way you look at me …” And looking at the benefits of 529 plans, there’s a lot to love!  

L: With LIMITLESS possibilities of what path your child may choose for their future, a 529 account can help turn their dreams into reality. Today’s children are preparing for careers that are the backbone of society, and jobs we haven’t even imagined yet! To help prepare them for wherever their journey may lead, your 529 funds can be used at any eligible educational institution in the United States, both in-state and out-of-state, and abroad.

O: Investment OPTIONS allow each Participant to investaccording to their own risk tolerance and investment strategy. With a diverse selection of investment options, 529s can help keep your family’s education savings goals on track.

V: It takes a VILLAGE! With the rising cost of education, parents don’t have to save alone. Invite friends and relatives to contribute to your child’s account. Holidays, birthdays, and other special occasions are the perfect opportunities to let others know just how easy it is to contribute. Every dollar saved matters by reducing the burden of borrowing and the amount of debt your scholar may have.

E: EXPENSES beyond just tuition at two- and four-year education institutions are qualified withdrawals; use account funds for room & board, books, supplies, fees and equipment, including a computer. While apprenticeships don’t typically involve a tuition bill, there can be fees, books, supplies, and other required equipment. 

Love’s transformative power shows the children in our lives how important they are to us and enables them to know we believe in their potential. Investing in their future with dedicated education savings is an easy choice with the L-O-V-E benefits of 529 plans.  

About the Author

Iowa State Treasurer Roby Smith is the administrator of Iowa’s 529 Education Savings Programs, College Savings Iowa and the IAdvisor 529 Plan, with over $6.4 billion invested and more than $5.2 billion in qualified withdrawals.

Why 529 college savings plans are perfect for technical and vocational pathways

By Jackie Ferrado, Associate Director for Community Engagement, Washington 529 College and Education Savings Plans (WA529)

February 6, 2024

The landscape of higher education is constantly evolving. It has even more so in the past few years as students have suddenly begun learning, studying, and networking from behind the screen. Recognizing that learning can happen from anywhere, at any time, and in a variety of ways is the foundation for increasing access to higher education. 

Diversity in education

When we think of higher education from a holistic point of view, it’s important to consider that employees who come to the workplace with education and training from vocational, technical, and apprenticeship programs are equipped with practical knowledge and skills that allow them to be job-ready and prepared to meet the demands of the specific industry. Through practice and hands-on learning alongside licensed professionals, apprentices gain insights into the real work that may not resonate as well from a classroom setting alone. This approach can be meaningful to employees and employers alike. 

Supporting economic recovery

The cost of pursuing a degree continues to increase, and students may find themselves taking out more student loans than necessary and receiving a credential that may or may not best meet their career goals. Through individual savings efforts and a careful and thoughtful educational path that supports career goals and passions, students with technical and vocational training can often gain valuable skills at a more affordable cost and enter the workforce sooner. As a result, these students may find themselves in a high-demand position with a competitive salary. 

Using 529 funds for trade schools and apprenticeship programs

Families who are saving for their child’s future education in a 529 plan can be confident that if their child prefers a program through a technical, vocational, or apprenticeship pathway, their savings will cover a variety of those expenses. 

Here are three tips for maximizing the benefits of a 529 plan for technical, vocational, and apprenticeship training programs:

Whether a student chooses to continue their education and earn a degree or certificate for their training, their options are wide open, and the experience will provide them with a positive and lasting impact. 

By embracing these diverse pathways and using savings options like a 529 plan, these future students can pursue careers that satisfy their passions and help them build a fulfilling career. 

In the words of Malcolm X, “Education is the passport to the future, for tomorrow belongs to those who prepare for it today”. Let’s give the younger generation the encouragement to pursue their dreams, the tools and information to be financially prepared and the opportunities to create their educational pathways from the variety of available options.

About the author:

Jackie Ferrado serves as the Associate Director for Community Engagement with the Washington 529 College and Education Savings Plans (WA529). Since 1998, tens of thousands of students have used more than $1.7 billion of their WA529 savings to attend colleges and trade schools in the U.S. and at least 15 foreign countries. Outside of work, Jackie enjoys baking, reading, and spending time with her three grandchildren. 

By Jørn Earl Otte, Hartford Funds’ Strategic Marketing Consultant for SMART529 in West Virginia

January 8, 2024

This is the year! You’ve made the commitment – you are going to start setting aside money for your little one’s higher education.

Excellent! Your child or grandchild will be very thankful, and your New Year’s Resolution to start that 529 plan might be one of the easiest resolutions to keep! But where to begin?

The idea of saving for college or trade school can be scary, and the options available can seem overwhelming. With so much in the news about the rising cost of college, it can feel like saving for your child’s future is too big a burden to bear. But you don’t have to feel that way. There are ways to save money for your child or grandchild that can be simple, effective, and stress-relieving.

Here are three simple and effective things you can do to start saving for your child’s future education.

1. Make a monthly “everything” budget: When folks are living paycheck-to-paycheck, the idea of saving even a little bit of money seems too daunting. Groceries, car payments, mortgage, or rent – there appears to be nothing left over. However, if you take a closer look at your monthly expenses, you may be surprised to learn that you have some money left over, but it has been used for things you don’t need. Sit down one evening and write down every single bill you have for the month. Water, electricity, and so forth, but also streaming services, cell phone plans, magazine subscriptions, how many times you ordered dinner-to-go, and how many bags of chips you bought at the grocery store. Everything. Down to the last penny. It may take a little while, but knowing exactly where your money is being spent can be eye-opening. Then, write down your monthly income. Odds are the two figures are pretty close, and likely too tight for your comfort. Look at the list of your monthly expenses – Do you need to spend $100/month on fast food? What about those subscription services? And those magazines? Do you actually read them, or do they collect dust? Be honest with yourself, and you will likely find at least a few dollars each month that can be set aside for something more significant than binge-watching a 1980s sitcom.

2. Open a 529 account: No one knows what the future holds. Your child or grandchild may go to college in-state, or they may fly across the country to follow their dreams. They may love working with their hands and pursue a career in carpentry, or they may get excited about the idea of becoming an electrician. Whatever they may do, you can prepare for it financially with a 529 plan. While most people think 529 plans are just for tuition at traditional four-year colleges, they can be used for so much more – vocational school, technical school, apprenticeships, books, supplies, room and board, and more. And you can feel good knowing that, no matter how little or how much you save for them, every dollar you give them is a dollar they won’t have to borrow from a lender to pay back for the next 20 years. Check out the 529 plan available in your home state, or compare various plans from around the country: www.savingforcollege.com (Read on for more about this).

3. Start small, commit to growth: You will need to check with your own state’s 529 plans to determine what minimums, if any, may exist for opening a plan, and what tax benefits may be available to you. You may also need to seek out the advice of a financial professional to determine which 529 plan is right for you – your own state’s or another’s. Once you know the best path for you, open a 529 account with at least the minimum required. It could be as little as $5, $25, or in some cases even just $1. Commit to the amount every month. Set up automatic contributions from your checking account, or talk to your employer about payroll deductions. After a few months of these minimum contributions, you may begin to realize that you can afford to increase them. If you can, commit to manageable increases every month until you reach the maximum figure you feel you can contribute. No matter how large or small that amount turns out to be, you will have made a tangible, meaningful difference in the lives of your children and grandchildren.

Start with these three simple steps: Budget, Open, Commit. And when your little loved one decides where they want to expand their educational future, you will have helped them to have a financial head start. Happy New Year and Happy New 529 Account!

About the author: Jørn Earl Otte is Hartford Funds’ Strategic Marketing Consultant for SMART529 in West Virginia.