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STORM SEASON
Important Note:

June through November our agency may become prohibited from binding coverage should a “Tropical Disturbance” enter the Gulf of Mexico or Caribbean Sea.

In these cases we may be unable to bind new coverage quoted in open proposals until the storm leaves our area and our binding authority has been restored.

Please arrange your coverage protection early to avoid this type of delay. While we regret any inconvenience, the carriers impose these restrictions on all agencies.

Comprehending The Benefits Of 529 College Savings Plans

Comprehending The Benefits Of 529 College Savings Plans

If you have one or more kids, paying for college has probably crossed your mind at least once. One of the most popular options for saving for college is via a 529 College Savings Plan. Chances are, you are familiar with the plan… you’ve probably heard about it or read about it before.

But you may not realize how much of a tax benefit a 529 plan offers so hopefully this information will help…

The most obvious tax benefit is with state income taxes. For example, let’s say you start contributing $100 per month to a 529 plan for two children. Depending on where you live and your income, that can create tax savings from $100 to $200+.

But the real strength of a 529 plan is its ability to generate tax-deferred growth & tax-free withdrawals when used for approved purposes. Some 529 plans offer guaranteed returns while others behave more like mutual funds. Regardless, as you add funds and they accrue interest, that accrual occurs without being negatively impacted by taxes. And as long as funds are for defined higher education costs, the withdrawals aren’t subject to state for federal income tax.

Of course, non-qualified withdrawals are subject to federal taxes at your regular tax rate and you’ll pay an extra 10% penalty on what you withdraw. (There are some complex rules about how penalties are calculated so it is best to talk with your financial advisor to uncover the specifics for your situation.)

The key value of a 529 plan is to help with long-term planning of how to help pay for college. The trick is to start saving as soon as possible so the balance can grow… have a newborn? It’s time to start saving for college! Those relatively small amounts you save each month combined with the power of interest can yield a healthy sum by the time kids are ready to head off to higher education.

Some important notes:

  • You can participate in almost any state’s 529 plan regardless of where you live… take your time to find a 529 plan that offers the greatest benefit for your situation.
  • You can leverage 529 savings to pay for post-secondary education including community college, trade schools, study abroad programs, and of course traditional four-year colleges & universities. You do not have to apply funds toward colleges in the state the plan originates from.

Our best advice is to talk with your financial advisor here to learn about how 529 plans can benefit your specific situation and to explore the best options for you. They’ll offer guidance on the pros & cons of 529 plans for your situation as well as possible alternatives including life insurance as a savings alternative.