Celebrate May: The Month of the 529 Savings Plan!
We celebrate a few beloved festivities in May. The 4th was for eager Star Wars fans (May the Fourth be with you, too, on what was just unofficially the official Star Wars Day). And the 5th, better known as Cinco de Mayo, is all about guacamole and tacos.
So how about May 29? We hope that’s the day you celebrate National 529 College Savings Plan Day! It might not have its own corresponding snacks or blockbuster movies, but in our world, the 529 is fun. Look at it this way: Without saving for college, there is likely going to be student debt … and student debt is straight up one of the least fun things on the planet.
The Florida Savings 529 Plan ranks in the nation’s Top Ten Performing Plans, both for five-year and 10-year historical performance, according to savingforcollege.com.
If you’re not excited about 529s, we’re going to tell you why you should be. Here are 10 things to know about this popular savings program.
- The 529 was designed just to save for college. The name “529” comes from Section 529 of the tax code, which authorizes states to offer the plans.
- Magic words: Tax-free. When you put money in a savings account or a mutual fund, it will earn interest, but that interest is going to be hit with income taxes. Not so with a 529! Your contributions will earn interest and will not be taxed when the money is taken out to pay for college.
- So many expenses are eligible! You can spend the money you save in a 529 on much more than tuition. Other qualified expenses include fees, room and board, and the cost of books, supplies and equipment. A 529 can be applied at the undergraduate and graduate levels, as well as at vocational and technical schools.
- No amount is too small. Don’t have $2,500 to start a 529? How about $25? There’s no minimum amount to open an account.
- Set it and forget it. The Florida Savings Plan makes it easy to automate your contributions if you’d like to do so.
- Other people can contribute. Do you think your child’s grandparents or other family members would like to help pay for college? The Florida Savings Plan makes it easy, offering gift certificates and a gifting portal.
- It’s really hard to save too much. If you do, you have several options. You can hold onto the funds in case your child decides to go to graduate school. You can change the beneficiary to another qualifying family member who is planning to go to college, or you can make yourself the beneficiary and further your own education. Also, a child won’t be penalized if they get a scholarship or go to a U.S. military academy.
- Everyone is eligible. 529 plans have no income limits, age limits or annual contribution limits.
- You don’t have to attend a Florida school to use your Florida 529 Savings Plan. As with our Prepaid Plans, your contributions and earnings are eligible for use at any eligible public or private college.
- Already have a Florida Prepaid Plan? Still open a 529. A 529 can make it easy to save for expenses that don’t fall under the Prepaid plan, such as books and computers.
Bonus Reason: The sooner you start, the better. If you have a retirement account, you’ve probably heard about the benefits of compound interest. It’s the same for 529s.