Welcome to You and Your Money. Today's episode features Leisl Langevin, Senior Vice President and Financial Advisor at Weiss, Hale & Zahansky Strategic Wealth Advisors. May 29 is 529 college savings day, we'll be talking about a top financial priority for many families, college savings. So tell us about 529 college savings plans. What makes them such a popular choice? Well, 529s, they're one of the most widely used and flexible college savings vehicles. And there's several reasons why that is, and we'll talk about those today. But the primary advantage is tax free growth for education. So contributions that you can make are tax deferred. And then money that you take out for quality education expenses, also tax free. number two, you get tax breaks for contributions. So, for example, in Connecticut, if you're a single filer and you contribute up to 5000 per year you can get a deduction, and it's 10,000 for married couples. Number three, the beneficiary can be changed at any time. So if you have a child that doesn't go to college, you can change it to their sibling or cousin. The definition is very broad. So that's a benefit number. 4529s aren't just for college anymore, so you can use it before you go to college on qualified expenses. So they've expanded that. And then lastly, any. And this is the most exciting, we think, is any unused 529 money can be rolled into Roth IRas. And that was as a result of the secure act 2.0. And so that's. That's a really great option. So, again, great information, but what about making contributions? What do we need to know about that? yeah, so there's a couple things here. We work with clients to determine what their goals are, because, really we have some clients and that want to contribute and pay for all of college, and some that do not. so contribution limits do vary by state. In Connecticut, you can contribute up to 300,000 to a 529. So we don't see that typically every day, but that is the max there. Clients that are looking to save as much as possible, we might recommend that they make the annual gift exclusion. If you've heard of that. This year, it's 18,000 per person per child. If you're married, 36,000 that a married couple can give to their child. So that that really helps. And then, number four, you can also super fund a 529 plan, which means you can give five years of an annual gift to a child's 529. So if you're single, that's 90,000 giving to your child. If you're married, giving to your child, you can give 180,000 into a 529. All right, again, great information. Liesel, will you share some tips on how our listeners can choose the best college savings strategy for their situation? Sure, Gary. Deciding on the best approach, there's really. There's several factors that we consider, but number one, and I mentioned it a bit in the last section, but determining what your goals are, do you want to pay for all of college or some of it? So that's number one. Number two, evaluate the potential tax benefits by considering the federal and state tax incentive to maximize your tax savings. So that's a huge one there, and why people contribute. And three, determine how much control you want to have over the investment choices. So 529 plans, generally, they have more limited options. Or if you choose other options, like a Roth saving in a Roth IRA for college, or just a joint investment account, you typically have more flexibility with that. So it's really determining what are the goals. And working with a financial advisor like ourselves at WHZ to help develop your comprehensive college plan, because it's so different for everyone. The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a non qualified withdrawal will be subject to ordinary income tax at the recipient's marginal rate and subject to a 10% penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration and management fees and expenses. For more information regarding wealth management and customized financial planning with Weisshale and Zahansky Strategic wealth Advisors, please visit w hz wealth.com. Weisshale and Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial network member Finra SIPC, a registered investment advisor, fixed insurance products and services offered through CES Insurance agency. They practice at 697 Pomfret Street, Pomfret Center, Connecticut 06259 and 392 a merrill road, Tallinn, Connecticut 06084. They can be reached at 860-928-2341 Weiss, Hale and Zahansky Strategic wealth advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals while providing absolute confidence and unwavering partnership for life.
