"Almost anybody saving for college would be crazy not to at least consider 529 plans.”

A 529 plan is an investment plan operated by a state designed to help families save for future college costs. As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant (see Section 529 of the Internal Revenue Code) that can make saving for college much easier than in years past.

First, you get unsurpassed income tax breaks. Your investment grows tax-free for as long as your money stays in the plan. And when the plan makes a distribution to pay for the beneficiary's qualified college costs, the distribution is federal tax-free as well. This treatment applies for distributions in the years 2002 through 2010. Unless Congress decides to extend this tax break, qualifying distributions made after 2010 will be taxable to the beneficiary (earnings portion only).  Assuming that the student isn't earning hundreds of thousands of dollars running a dot-com company out of her dorm room, you should still save taxes with her lower income tax bracket.

Second, you the donor stay in control of the account. With few exceptions, the named beneficiary has no rights to the funds.

Finally, everyone is eligible to take advantage of a 529 plan, and the amounts you can put in are substantial (over $200,000 per beneficiary in many state plans). Generally, there are no income limitations or age restrictions.

Thinking about going back to college or graduate school in the future? Then set up a plan for yourself! There is no reason why you cannot be the beneficiary of your own account.

If the benefits of a college savings plan is something you’d like to explore, call the office at 778-4000 for an appointment to look at the 529 alternatives available to you.