10 June 2022 14:01

Choosing a 529 (PA Resident)

Does it matter what state your 529 plan is in?

No you don’t have to use your own state’s 529 plan. Very few states will prevent you from using their 529 plans no matter where you live, which means you can shop among just about all the different plans.

Does PA have a good 529 plan?

Pennsylvania’s 529 college savings plan ranks 2nd for the 1-year period ended June 30, 2019, according to Savingforcollege.com’s direct-sold 529 plan quarterly performance rankings.

Can you invest in a 529 from a state you don’t live in?

Most 529 plans, investment plans designed specifically for college savings, are available to both in-state and out-of-state residents. Plans vary in ability to switch 529s without tax penalty, minimum initial deposits, maximum contribution rules, and investment options and costs, as well as tax benefits, says O’Brien.

Does Pa allow deduction for 529 contributions?

Pennsylvania taxpayers can deduct contributions to the PA 529 IP from their Pennsylvania taxable income up to $16,000 per beneficiary, per year. For married couples, contributions up to $32,000 per beneficiary, per year, are deductible, provided each spouse has taxable income of at least $16,000.

Does it matter where I open a 529?

You can open a 529 plan directly through a specific state’s plan or through a broker. If you invest directly with the state plan, you’ll have to register, research the available investments and generally track the 529 plan over its lifetime — typically all online.

Can you move your 529 plans from state to state?

There are two methods of transferring a 529 plan to a new state. One method of transferring 529 plans involves a direct rollover from the old 529 plan to the new 529 plan. Open a 529 plan account in the new state if you don’t already have one. Download a rollover form from the web site of the new state’s 529 plan.

Can I use my PA 529 out of state?

For higher education, the money in your PA 529 account may be used at any eligible higher education institution in the United States and abroad that qualifies under federal guidelines.

How do I choose a 529 plan?

When choosing a 529 college savings plan, your choice should consider your personal situation, including your values, state of residence, risk tolerance, and investment time horizon. Ultimately, your goal is to choose the 529 plan that maximizes your funds available to pay for college.

Can PA 529 be used for high school?

529 plans can be used for private elementary and high school tuition. The Tax Cuts and Jobs Act, which was signed into law in December 2017, allows families to use 529 plans to pay for up to $10,000 in tuition expenses at elementary or secondary public, private or parochial schools.

Are 529 earnings taxable in PA?

In general, qualified distributions from a 529 plan will be exempt from both Federal and Pennsylvania income taxes.

Are 529 plans subject to PA inheritance tax?

The only 529 plan that is exempt from Pennsylvania inheritance tax is the College Career and Savings Program Account program, controlled by the Pennsylvania Department of Treasury. All other 529 plans are subject to Pennsylvania inheritance tax.

How much can a parent contribute to a 529 per year?

In either case, parents receive the same treatment as any other person making a contribution: each parent can give up to $15,000 annually to their child’s 529 plan without having to file a gift tax return, for a total of $30,000 per year.

Can you have multiple 529 plans in different states?

Sure, no problem. Most 529 savings plans have no state residency requirements. You can open accounts in as many of these states as you want, although in most cases there is little reason to have accounts in more than one or two states.

What is the max 529 contribution for 2021?

Gift-tax exclusion

In 2021, that means you can contribute up to $15,000 per beneficiary ($30,000 per married couple) to a 529 plan without having to pay gift taxes. If you set up more than one 529 plan this year, you can contribute up to $15,000 to each without having to file a gift-tax return.

What is the best way to save for your child’s college?

8 Ways to Save for Your Child’s College Education

  1. Open a 529 plan.
  2. Put money into eligible savings bonds.
  3. Try a Coverdell Education Savings Account.
  4. Start a Roth IRA.
  5. Put money into a custodial account.
  6. Invest in mutual funds.
  7. Take out a permanent life insurance policy.
  8. Take out a home equity loan.

Should parents or grandparents open 529?

Grandparents may be the best people to open a 529 plan for future graduates. Financial advisers typically advise parents to create a college savings account when a child is young — but it’s the grandparents who should set one up.

How much should you put in your child’s college fund?

Simply multiply your child’s current age by $2,000 for the amount you should have in college savings by that age. This figure can show you whether your college savings to date are generally on track to cover 50% of the cost of attending a 4-year public college.

How can grandparents help pay for college?

Grandparents can open a 529 account and name a grandchild as beneficiary (only one person can be listed as account owner, though), or they can contribute to an already existing 529 account. Grandparents can contribute a lump sum to a grandchild’s 529 account, or they can contribute smaller, regular amounts.

What is the best way to set up a college fund for a grandchild?

Decide on Account Ownership. Grandparents hoping to chip in for a grandchild’s college education can open a 529 plan themselves or contribute to a parent-owned account. In many cases it may be easiest to list the child’s parent as the owner of the 529 plan.

How much money should you give a grandchild for high school graduation?

The amounts can range depending on your relationship, but ranges include: Friends and siblings: $20-75. Parents: $100 or more. Grandparents: $50-100 or more.