Recently, I was asked by my dad to look into different ways that he could use some investment funds that are not providing a good rate of return. He also wanted to do something that could be beneficial to his grandchildren. We looked into the Virginia 529 Plans to see if they were a good fit for him. Although I already knew that 529 plans were a good idea, I learned a few new things as well:
- Some 529 plans College Savings Plans can benefit people of any age who are pursuing higher education and can be established at any time.
- Some 529 plans can be used for schools in other states.
- Some 529 plans can be established online or at a local bank.
Virginia currently has four different plans: a pre-paid education plan, an education savings trust that can be established online, a College America plan that utilizes a broker, and a College Wealth plan that can be set up through certain banks. The requirements and restrictions vary for each plan.
The best place to start is at www.virginia529.com for more information and resources.
Most exciting for my dad was the fact that he can deduct up to $4,000 per year in contributions per plan from his Virginia taxes. Any remaining deduction will carryover each year until it is used up. Another plus is that once he turns 70, he can deduct the full amount of contributions, which will be helpful when he is required to start taking an annual minimum distribution from his 401(k).
So, if there are any grandparents (or parents) out there who are looking for a better return on investment, a 529 plan might be a good place to start looking. After all, an education is “priceless”.