Mother’s Day and 529 college savings plans

Why not celebrate your sisters, daughters and other mothers by adding to their kids’ college savings?

Mother’s Day and 529 college savings plans

Time to read: 2 min

Sunday, May 12 is Mother’s Day, providing an opportunity for those everywhere to celebrate the special mothers in their lives. And when I say mothers, I do not mean just yours — I mean any wonderful woman in your world who is a mother. Someone who nurtures, provides and loves without hesitation or qualification. This could be your sister, daughter, best friend or even a cousin twice removed.

As you celebrate Mother’s Day, consider honoring these special moms in a way that will leave a lasting legacy. By contributing to a 529 plan for their children, you celebrate motherhood while helping build a future for the recipients. You can even put your contribution in mom’s name to celebrate all she’s done for her kids.

Costs continue to rise

According to the most recent figures, the cost of higher education is heading in only one direction — higher. The most recent data from The College Board reports the cost of room and board, fees and tuition as exceeding $21,000 for the 2018-2019 academic year for in-state, public institutions and $48,000 for private universities.1 When you consider the burden that student loans place on young graduates, a 529 contribution could be the perfect Mother’s Day gift because every dollar saved is one less to be borrowed.

  • 529 savings plans are tax-advantaged, meaning that contributions are after-tax, earnings grow tax-deferred and qualified distributions are tax-free.
  • 529 plans can be used to pay for qualified educational expenses such as tuition, room and board, books, equipment and school supplies at any eligible institution.
  • In some states, 529 plans can be used to cover up to $10,000 per year of public, private or religious elementary or secondary school tuition. 
  • A 529 plan can be opened for anyone with a valid Social Security number. There are no account minimums to get started and no income limits to contribute.

Honor the moms in your life

So this Mother’s Day, consider giving the gift of college savings. It honors the special mothers in your life while providing their children with a gift that lasts a lifetime.

Interested in learning more about 529 plans? Visit CollegeBound529.com to explore helpful resources and tools to plan your own education savings strategy.

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.

1 Source: The College Board, Trends in College Pricing 2018

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.

For beneficiary changes to occur without federal or state income tax consequences, the new beneficiary must be a family member of the current beneficiary.

Important information

Blog header image: monkeybusinessimages/iStockphoto.com

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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