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529 College Savings Plans

529 College Savings Plans
529 plans are flexible accounts specifically designed for college savings. Distributions from a qualified 529 plan account are federal income tax-free. The plans were named after Section 529 of the IRS code that created them.

All 529 plans are "state" sponsored meaning they are issued by a specific state. This does not necessarily limit the investment choices available. Residents of any state can invest in any plan.

Basic Principles of 529 Plans

1. Plans offer a choice of portfolios tailored to a child's age or are customized on an asset allocation strategy;

2. Plans offer tax-deferred growth of earnings and federal income tax-free qualified distributions; and

3. The money can be used for tuition, books, etc. at most accredited two- and four-year colleges and universities, and vocational-technical schools nationwide
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Benefits of 529 Plans
1. Anyone can open a 529 account to save for a student's qualified higher education expenses;

2. There are no income restrictions;

3. The beneficiary can be changed to an eligible member of the original beneficiary's family at any time without a penalty;

4. The beneficiary doesn't need to be a child. Adults can use the plans to save for their own qualified higher education expenses;

5. Residents from any state can open a 529 account in any state with a sponsored plan; and

6. Portfolios are professionally managed and diversified
Contribution Limits & Estate Planning Benefits
1. Individuals may contribute up to $55,000 and married couples may contribute up to $110,000 per beneficiary in a single year without incurring a federal gift tax impact; and

2. Once the gift is made, the funds are generally not considered as part of the donor's estate for tax purposes
Control of Assets & Distributions
1. The account owner (i.e. participant) maintains ownership of the assets until withdrawn;

2. Distributions from 529 plan can be taken at any time for any reason; however, if the funds are not used for qualified higher education costs, earnings will be subject to federal income tax at the participant's rate and a 10% federal penalty;

3. If the beneficiary receives a scholarship, the scholarship amount can be withdrawn from the 529 Plan and the 10% federal penalty tax on earnings will not apply. However the earnings will be subject to income taxes at the participant's rate; and

4. Withdrawing money from a 529 plan is easy. Simply fill out a distribution form with instructions on where the money should be sent, and submit it to the plan sponsor for immediate processing

Shoreline's Competitive Edge
We are a network of independent professionals with over 150 years of combined experience in wealth management and advice. Members of this network can be used individually or collectively for a single program or a series of seminars or workshops for your company or organization.

For more information:
If you'd like more information about how diversified investment advisors can help you achieve your financial objectives through personalized wealth or retirement and risk management strategies, please contact us. We welcome the opportunity to discuss your unique needs and how we may best meet them.

This page (formatted for versions 10.0 and higher of Internet Explorer) is updated regularly so check in from time-to-time to see new articles and updates. You can click on any underlined words on each page to see a specific wealth management topic in the left margin of each page.

Charles M. Bloom, Registered Principal offers securities and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.

The information contained in this web site is neither an offer nor solicitation of any security or service.


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