Do you know what a 529 plan is?
By Kim Ward, WVSTO Communications
Working at the West Virginia State Treasurer’s Office, the SMART529 College Savings Plan comes up on almost a daily basis. That’s because the Treasurer’s Office administers the plan, so talking about knowing about SMART529 is our job.
But apparently the general population isn’t nearly as informed. A new report found that 75% of American’s don’t know what a 529 plan is. 75%!!! That’s actually HIGHER than the number from 2015, where only 66% said they didn’t know what a 529 plan is. While 88% of those surveyed said they believe a college degree is important, they are totally clueless about one of the best college savings opportunities out there.
Considering the ever increasing problem of student loan debt, how is it that so many people are totally unaware of these savings plans? So here’s a brief description of what a 529 plan is. A 529 plan is a tax-advantaged investment plan. You can usually invest in any state’s plan, but look first at your own state plan because they often offer additional tax advantages for in state residents. West Virginia’s plan is called SMART529, and offers three plan options for college savings. Ok, so that’s a very basic explanation…here is what you really need to know. SMART529 savings can be used at colleges, universities, even many trade or training schools, nationwide. If you invest in your state’s 529 plan, you are NOT limited to in state schools, a common misconception about college savings plans. 529 funds can be used for any qualified education expenses, and the list of what qualifies keeps growing. It doesn’t just cover tuition and fees. It can be used to pay for books, if your school of choice requires students to have a computer, it even covers that. Room and board? Yep, it covers that, too.
The plan is also very flexible. The plan can be passed from one family member to the next. So if you have an older child that doesn’t use the savings, you can transfer it to the next child. If you decide to go back to school, you can even use it yourself! And because anyone can contribute to your 529 account, it’s a great way for grandparents and other family members to help save for your child’s education. It’s truly