10,000 REASONS TO SAVE SWEEPSTAKES
What: Sweepstakes for owners and nonowners of Path2College 529 college savings plans.
Requirements for nonowners: Must be a legal Georgia resident, at least 21, and the parent, legal guardian or grandparent of a child under 18 who is also a Georgia resident enrolled in school, homeschooled or not old enough to attend school.
Winnings: One account owner and one nonaccount owner will each receive a $10,529 contribution to a Path2College 529 Plan. Additionally, the school of a child from each winning entry will receive a $10,529 cash contribution. Winners will be selected in a random drawing and will be announced in September.
Deadline to enter: Aug. 15
Information and entry forms: www.path2college529.com/news/10000-reasons.shtml.
If you’re already planning to help pay for your children’s or grandchildren’s college education, why not be smart about it?
That’s the message that Mitch Seabaugh, executive director of Georgia’s Path2College 529 Plan, has been delivering to community organizations and civic groups across Georgia this year. The reaction he hears most often is that it sounds like a pretty good plan.
Just like 401(k) plans allow people to set aside money for retirement, 529 college savings plans are designed to put away money for higher education. All 529 plans must be state sponsored, and most states have one, but they differ in structure and quality.
“We believe that we have one of the lowest cost and best investment plans in the nation,” Seabaugh said. “We just want more people to know about it.”
Since the state of Georgia launched its 529 plan in 2002, the program has attracted more than 111,000 account holders who have accumulated a total of $1.3 billion in assets for their children, grandchildren and other family member’s postsecondary educations. Since an ongoing awareness campaign was launched in 2012, there has been a 9 percent growth in accounts.
“There are many good reasons to invest in Path2College,” Seabaugh said.
Here are seven benefits of opening a plan.
1. Tax advantages
As the money you contribute to a Path2College 529 account grows, earnings are free from federal and Georgia state income taxes. If withdrawals are used to pay for qualified higher education expenses, the money remains tax-free.
“Only nonqualified withdrawals will be taxed, and the 10 percent penalty on such withdrawals is limited to the earnings only, not the fund’s full amount,” Seabaugh said.
Georgia taxpayers may contribute and deduct up to $2,000 per account, per year on behalf of any beneficiary, regardless of income. They are required to itemize deductions to make this adjustment.
2. Easy to open and manage
Parents, grandparents, relatives and friends who are U.S. citizen or resident aliens and at least 18 can open an account for a beneficiary, or contribute to one. They can own more than one account, and the initial minimum contribution is only $25.
“The account is direct sold, which means that the owner communicates directly with the fund manager. You are making your own investment decisions,” Seabaugh said. “There is no middle man, no sales charges or start-up fees, and investment management fees range from .28 percent to .41 percent per year.”
3. Easy access
Customers have access to their accounts online or they can speak to college savings specialists by phone. Payments can be made by check and payroll deductions.
4. Flexibility
An account must be set up in a single beneficiary’s name, but if that beneficiary decides not to go to college, receives a full scholarship or can’t use the money for other reasons, funds in the account may be transferred to another family member, including the account owner if he or she wants to go back to school.
Although it’s a Georgia account, your child can attend any qualified public or private institution, community or technical college and certain proprietary and vocational schools for undergraduate, graduate and postgraduate work nationwide.
“While the HOPE scholarship only pays for tuition, this plan will cover books, supplies, equipment, fees and some room and board expenses,” Seabaugh said.
5. Sound management
“Our program is managed by TIAA-CREF Tuition Financing Inc., a financial services company with 90-plus years (of) investing experience and a strong reputation,” Seabaugh said.
6. Investment options
“All investment plans carry risk, but this one offers seven options, which vary in their strategies and degree of risk,” he said.
Owners may select one option or combination of several to fit their needs. There’s a contribution cap of $235,000, but the account can continue to accrue earnings after that amount is reached.
7. Minimal financial aid impact
“Because the account is considered an asset of the owner and not the child, it is assessed at a lower rate in the (federal) financial aid formula. It’s a better option than having a savings account in the child’s name,” Seabaugh said.
For more information, go to www.path2college529.com.
About the Author
