529 College Savings Plans

As your Registered Investment Advisor, it's important to me to keep you aware of strategies that can help you reach your financial goals in life. Whether it's achieving the retirement you envision, investing in a child's education or leaving a legacy, how you invest your money is critical to your success.

Today, I’d like to share with you a strategy that may provide you with a tax-advantaged way to invest in your children or grandchildren’s future while also offering you the possibility of estate planning benefits. The 529 College Savings Plan is a national plan that can help fund a child’s college education, and offers you:

▪     An opportunity for tax-free earnings. When you withdraw amounts for qualified higher education expenses¹, the earnings are federal (and possibly state) income tax-free.

▪     An opportunity to reduce your taxable estate, since contributions are considered gifts.

▪     The ability to maintain control of the account and change the designated beneficiary at any time.²

▪     An array of investment options. The diversified investment menu, and use of well-known funds and ETFs, is an important differentiator for the TD Ameritrade 529 College Savings Plan. Because there are several investment options, you have the freedom to choose the path that's right for you. Each investment option is designed to help you meet the increasing cost of higher education.

▪     The potential to make a special gift-tax election and make contributions of up to $140,000 per couple (or $70,000 per individual) for each beneficiary in just one year—without incurring any adverse federal gift tax consequences.³

Let me help you think strategically about education planning so you're not only investing in a child's future, but also your own. 

Investment Products: Not FDIC Insured. No Bank Guarantee. May Lose Value

1 To be eligible for favorable tax treatment afforded to the earnings portion of withdrawals from Section 529 accounts, such withdrawals must be used for “qualified higher education expenses,” as defined in the Internal Revenue Code. Any earnings withdrawn that are not used for such expenses are subject to federal income tax and may be subject to a 10% additional federal tax, as well as state and local income taxes.

2 You are generally permitted to change the beneficiary to another qualified member of the family, as defined under the Internal Revenue Code, without triggering income and a 10% additional federal tax. 

3 Contributions between $14,000 and $70,000 ($28,000 and $140,000 for married couples filing jointly) made in one year can be prorated over a five-year period without subjecting you to gift tax or reducing your federal unified estate and gift tax credit. If you contribute less than the $70,000 ($140,000 for married couples filing jointly) maximum, additional contributions can be made without you being subject to federal gift tax, up to a prorated level of $14,000 ($28,000 for married couples filing jointly) per year. Gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given beneficiary in the year of contribution. For contributions between $14,000 and $70,000 ($28,000 and $140,000 for married couples filing jointly) made in one year, if the account owner dies before the end of the five-year period, a prorated portion of the contribution may be included in his or her taxable estate.

Client First Advisors, LLC
1950 Sandy Point Lane
Mount Pleasant, SC 29466