You likely know all about 401(k) plans, but how much do you really understand about 529s?
In fact, as Liz Skinner writes in an excellent investmentnews.com piece, “the tax-advantaged college savings plans established by Congress 20 years ago are less well-known today than they were a year ago. About 72% of Americans cannot identify a Section 529 savings plan as being for college savings, according to a recent Edward Jones survey of 1,006 adults. That’s up from 66% a year ago.” Other excerpts from her article:
“Plan awareness is higher among those who would be most likely to have the resources to fund them. About 46% of those with at least $100,000 or more know what a 529 plan is, compared with 18% of those with less than $35,000, the poll found.
“Adults with children also were more likely to be familiar with the plans.
“About 12.5 million 529 plan accounts have a total of about $253 billion in assets today, according to the College Savings Plans Network. Funds in the plans can be used for most college expenses without owing taxes on investment gains.
“Some U.S. companies already have added 529 plan assistance to the benefits they provide their employees. Legislation introduced last month in Congress would allow employers to receive a tax deduction for contributing to employees’ 529 plans.
“The measure from U.S. Sen. Richard Burr, R-North Carolina, and Sen. Bob Casey, D-Penn., would give companies up to a $1,000 tax deduction for matching an employee’s college-related contribution.
“About 86% said they would participate in a 529 college savings program that was offered as an employee benefit, the recent Edward Jones survey found.
“The bipartisan bill also would extend further tax credits of up to $2,000 to low-income and middle-income families who save for college in 529 plans, which are named for the Internal Revenue Service code that created them.”