A 529 plan can help with those mid-year resolutions

Funding a 529 plan can help you achieve your savings resolutions for years to come

It feels like just yesterday we were toasting to a new year, but July is here already — and we’re officially mid-way between the resolutions we made last January and the ones we’ll be making next year. If you’re like many people, you likely vowed to be more fiscally responsible and save for the future — and chances are you’ll make the same resolution next year. Looking for a convenient way to cross that resolution off the list in 2019 and for years to come? Consider saving for your loved one’s education by funding a 529 plan.

What are the potential benefits of a 529 plan?

I believe a 529 plan offers several compelling features that make it a valuable part of any savings resolution.

  • 529 plans offer access to a wide variety of investments. Account owners can choose from a variety of different portfolio options (such as equities and fixed income) to create a custom investment solution tailored to their family’s savings needs and timelines. Alternatively, plans like CollegeBound 529 offer an age-based portfolio option, which automatically rebalances investments based on the age of the beneficiary, or a target risk portfolio, which is a pre-packaged strategy for investors with a conservative, moderate or growth-oriented risk tolerance. Unlike some savings options, there’s no need to conform to a one-size-fits-all approach. Instead, families can create a savings strategy designed around their unique needs.
  • 529 earnings grow tax-free. 529 plan contributions are made on an after-tax basis, but earnings grow federally tax-free and are not taxed when the money is withdrawn for use toward qualified expenses at any eligible college, university or institution of higher education (including vocational schools).1 Factor in compound savings, and that tax-free status can really help families maximize the impact of the money they set aside for college.
  • 529 plans are flexible and can be redirected to another beneficiary. Whether a student decides not to attend college or earns a scholarship, there are several reasons that 529 funds may not be needed after all. Luckily, they won’t go to waste, even if the original beneficiary doesn’t use them. In these cases, the account owner can simply designate a new beneficiary (including siblings, relatives, or even themself), and the funds can be applied toward their education instead. This gives families a little extra flexibility in using the money they’ve saved.

So as you cross off your big resolutions over the next few months, from cleaning out the garage to finishing your holiday shopping early, remember that anytime is a good time to begin funding a 529 plan. But if you open one today, that is one thing you can cross off of next January’s to-do list, too — talk about a double-duty resolution.

To learn more, visit CollegeBound529.com today.

1 Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes.

Before you invest, consider whether your (or the beneficiary’s) home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.

For more information about CollegeBound 529, contact your financial advisor, call 877-615-4116, or visit http://www.collegebound529.com/ to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. Invesco Distributors, Inc. is the distributor of CollegeBound 529.

Important information

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Thomas Rowley
Director, Retirement and Education Strategies

Thomas Rowley is director of retirement and education strategies and one of Invesco’s most frequently requested speakers. He provides analysis of the evolving retirement landscape and develops actionable strategies to help investors and financial advisors maximize their retirement-planning opportunities. Mr. Rowley regularly shares his insights online at invesco.com/us in addition to his speaking engagements.

Mr. Rowley’s insights reflect more than 20 years of experience in the investment industry. He translates his comprehensive knowledge of retirement planning into lively, clear explanations of the complexities of legislative, investing, tax and social issues.

Mr. Rowley shares his analyses of retirement-related issues through regular personal appearances, continuing education webinars and Web-based commentaries.

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