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Five things to know about 529 plans


With the rising costs of higher education, parents need to start preparing now for the expenses of tomorrow. It doesn’t matter if your child is learning to count or deriving equations with ease, there’s no better time to start investing for higher education needs than right now.

Here are five things every parent should know about 529 education savings plans:

  1. Flexible and transferrable: When you open a 529 plan, you are the “owner” of the account for the benefit of your selected beneficiary, such as your child, grandchild, niece or nephew. Should the designated beneficiary not need financial assistance for college, the beneficiary can be changed.
  2. Not just for college: While funds from 529 plans can be used for qualified higher education expenses, including tuition, fees, room and board, books, computers and other required materials, starting in 2018 they can also be used for similar expenses associated with public, private or religious primary and secondary education.
  3. High contribution limits, no income restrictions: Plan contributions can be made up to a maximum balance – which differs by state and/or plan – for all program accounts per beneficiary. Plus, there are no income restrictions on the account owner.
  4. Anyone can contribute: Any U.S. citizen – including relatives and friends – can contribute to a 529 plan for a selected beneficiary. Some grandparents might consider 529 plan contributions as birthday gifts.
  5. Estate planning advantages: Especially important for grandparents or other relatives, contributions to a 529 plan account are excluded from the donor’s taxable estate for federal tax purposes (assuming the donor is not the beneficiary).

To learn more about 529 plans, contact a financial advisor at Waddell & Reed. Or visit Ivy InvestEd 529 Plan for potential tax benefits, frequently asked questions and information on how to enroll.

Need more insight? Let us be your guide.

Our national network of experienced financial advisors can help you create a personalized plan to help you identify financial goals and get you where you want to go in life.

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Associated Tags: Saving for College, Education Planning

The Ivy InvestEd 529 Plan is offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program (the “Program”). Waddell & Reed, Inc. is one of multiple financial institutions eligible to offer investments under the Program.

Non-residents or tax-payers of states other than Arizona should consider participating in the 529 plan(s) available in their state of residence as such plan(s) may offer more favorable state income tax or other benefits than those offered under the Ivy InvestEd 529 Plan. Please consult your tax advisor regarding your personal tax situation.

Accounts are not insured by the State of Arizona, the Family College Savings Program Trust Fund (”the Trust”), the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., or any affiliated or related party, and neither the principal deposited nor the investment return is guaranteed by any of the above referenced parties.

Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the IVY InvestEd℠ 529 PLAN. This and other important information is contained in the IVY InvestEd℠ 529 PLAN Program Overview, IVY InvestEd℠ 529 PLAN Account Application, and the prospectuses, or if available, summary prospectuses, all of which may be obtained at ivyinvestments.com or from a financial advisor. Read them carefully before investing.

The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency or purpose for or timing of distributions. Taxes are deferred until withdrawal. The earnings portion of a non-qualified withdrawal is subject to a 10% penalty as well as federal and/or state taxes.

Investment return and principal value will fluctuate, and it is possible to lose money by investing.

This information is provided for informational and educational purposes only. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. This information is not meant to be a complete summary or statement of all available data necessary for making financial or investment decisions and does not constitute a recommendation.

Please note that the information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Waddell & Reed, Inc., nor its Financial Advisors give tax, legal, or accounting advice.

This information is not meant as financial or investment advice pertaining to your personal situation. The selection of appropriate investment, insurance or planning options and/or strategies should be made on an individual basis after consultation with appropriate legal, tax and financial advisors. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.

Securities offered through Waddell & Reed, Inc., Member FINRA/SIPC, are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements. Guarantees provided by insurance products are subject to the claims-paying-ability of the issuing insurance company.

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