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529 Education Plan

A 529 plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code, which created these types of savings plans in 1996.

To schedule a free initial consultation to discuss federal estate tax planning, contact a San Francisco attorney at The Evans Law Firm at 415-441-8669 or 888-50-EVANS or info@evanslaw.com.

San Francisco Lawyers, Advising on the Creation of College Savings Plans

The tax benefits of a 529 education plan include:

  • Federal tax benefits: 529 plans offer unsurpassed income tax breaks. Although your contributions are not deductible on your federal tax return, your investment grows tax deferred, and distributions to pay for the beneficiary’s college costs come out federally tax free.
  • State tax benefits
  • Donor retains control of funds: You, the donor, stay in control of the account. With few exceptions, the named beneficiary has no rights to the funds.
  • Low maintenance: A 529 plan can provide a very easy hands-off way to save for college. Once you decide which 529 plan to use, you complete a simple enrollment form and make your contribution (or sign up for automatic deposits).
  • Simplified tax reporting: You won’t receive a Form 1099 to report taxable or nontaxable earnings until the year you make withdrawals.
  • Flexible: If you want to move your investment around you may change to a different option in a 529 savings program every year (program permitting) or you may rollover your account to a different state’s program provided no such rollover for your beneficiary has occurred in the prior 12 months.
  • Substantial deposits allowed: Everyone is eligible to take advantage of a 529 plan, and the amounts you can put in are substantial (over $300,000 per beneficiary in many state plans). In California, up to $12,000 can be contributed each year to a 529 plan without having to file a gift tax return. Contributions can continue until the account reaches $250,000. If a gift tax return is filed, gifts of more than $12,000 may be made during a calendar year.

Tax Planning Assistance From Lawyers Serving Oakland and Other California Communities

To discuss creating a college savings plan, please call 415-441-8669 or contact our San Francisco attorneys online via e-mail to schedule a free initial consultation. We serve clients throughout the Bay Area and Southern California.

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