May 29 is here, bringing with it a bevy of reasons to jump-start your college savings. To celebrate "5/29," 529 plans across the country are offering enticing incentives to new and current enrollees. Most of these incentives won't send your savings into a higher tax bracket, but they can provide a little extra padding that will grow with time. Here's what's available.
Most 529 accounts can be opened with as little as a $25 investment says Derek DeLorenzo, vice president of client relationship management with Ascensus College Savings, a company that provides administration services for 31 529 plans across 17 states. The Utah Educational Savings Plan is helping its new 529 account holders boost their initial savings by providing a $20 match to all new enrollees who contribute at least $20. Virginia529 is upping the ante by offering a $50 match to all new enrollees who open an inVEST college savings plan with $100 or more. The state will also waive application fees on inVEST accounts and give away an inVEST account already loaded with $529 to the parents of the Virginia baby born closest to 5:29 p.m., May 29. The FutureScholar program in South Carolina is running a similar incentive.
A greater number of states will host giveaways, most of which stick tight to the "5/29" theme. Ohio's CollegeAdvantage plan, for example, will pass out 20 College Savings Awards of $529 each while a lucky account holder in Missouri's MOST program will receive a whopping $5,290. Odds increase the more you promote the program through social media networks. Those who want a bonus but don't want to leave it to chance should head south to Texas' 529 program, where students can win up to $2,000 in prepaid tuition units based on their academic achievement.
DeLorenzo is quick to point out that the long-term benefits of opening a college savings plan far outweigh the immediate incentives offered on May 29.
"There's a tremendous amount of control in those accounts, as well, where the account owner is the one who actually maintains control of the assets," DeLorenzo says. "The money can be used at any eligible two or four-year college. It can be used in vocational training ... as along as you're using the distributions for qualified higher education expenses, (disbursements) come out free from federal and state income tax."
Families who are thinking about opening a new account today also should be mindful that the plans offered in their state may not be the best choice, as 529 plans vary tremendously in terms of fees and plan performance. Several states offer generous state tax deductions or credits on plan contributions and a few even offer matching grant programs that can boost your account year after year.
"We always recommend that people look at their home states first," DeLorenzo says. "Look to see if there's a benefit to either the account holder or the beneficiary being a resident of the state."
A full list of 529 College Savings Day incentives by state is available at CollegeSavings.org.