Information for Financial Professionals
Enjoy the benefits of a 529 plan while giving the gift of education
With a 529 plan, parents, relatives and friends can help fund a significant portion of a loved one’s future college expenses and at the same time enjoy many added benefits as a 529 plan account owner. A knowledgeable advisor who understands how these benefits work can help maximize the power of a 529 plan.
The Future Scholar 529 Plan can provide you with the knowledge and resources you need to tailor an education funding plan to each family’s needs and develop rewarding and lasting, multi-generational relationships.
Advantages for account owners
- Ability to remove assets from a taxable estate. Annual gift tax exclusion limits per beneficiary for 2014: $14,000/individual and $28,000/married couples.
- Five-year accelerated gifting option allows up to five times the annual limit to be gifted in a single year. Five-year forward gifting limits: $70,000/individual and $140,000/married couples.
- Learn more about the gifting benefits of a 529 plan with our Advanced Gifting article
- Maintain complete control of the account (including ability to revoke gifts), even though contributions are considered completed gifts and are excluded from the account owner’s taxable estate.
- Grow account free of federal taxes (and in many states, also state income tax free).
- Max fund" a 529 plan. With many 529 plans allowing balances over $300,000, account owners may consider giving above their annual gifting limit to "max fund" a plan up to the maximum account balance and remove more assets from their taxable estate. This involves using some of your Unified Credit (your lifetime gift/estimate tax exclusion), currently $5.34 million for 2014.
- Possibly avoid new taxes
- Beginning in 2013, the Health Care and Education Reconciliation Act of 2010 imposed a new 3.8% net investment income tax on certain unearned income of high-income individuals, estates and certain trusts
- Contributing to a 529 plan could help high-net-worth investors mitigate or avoid this tax
- Growth in a 529, as well as distributions, are not subject to the 3.8% tax
Prepare your clients for future college costs
Saving for college may seem overwhelming, but the sooner your clients start planning the better off they will be. Columbia Management offers a variety of tools you can use with clients to help estimate their personal circumstances.
- Our College Savings Projector calculator can provide a personalized, realistic estimate of what college will cost and what it will take to save for it.
- The Expected Family Contribution (EFC) calculator can provide an estimate of how much a family may be expected to contribute out-of-pocket when it comes time to pay for college.
Call your Columbia Management representative to take advantage of our education funding resources.
Offering all of the benefits provided by the Internal Revenue Code Section 529, plus:
- A multi-managed investment lineup with leading money managers View options
- 23 single fund options and seven asset allocation portfolios.
- Strategic and tactical management of asset allocation portfolios
- Age-based risk tracks, which take into consideration a family's risk tolerance in addition to their child's age
Asset allocation does not assure a profit or protect against loss.
Your clients should consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. Contact Columbia Threadneedle Investments for a Program Description, which provides this and other important information about the Future Scholar 529 College Savings Plan. The Program Description should be read carefully before investing. Your clients should also consider, before investing, whether their or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.
Columbia Management Investment Distributors, Inc., member FINRA, is the distributor and underwriter for the Future Scholar 529 College Savings Plan Financial Advisor Program. The Office of State Treasurer of South Carolina (the State Treasurer) administers the Program and has selected Columbia Management Investment Advisers, LLC and Columbia Management Investment Distributors, Inc. (Columbia Management) as Program Manager. Columbia Management and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the Program. Columbia Management is not affiliated with the State Treasurer.
Any tax information given on this site is general in nature and does not constitute tax advice on the part of Columbia Management Investment Distributors, Inc. or its affiliates. The information cannot be used for the purposes of avoiding penalties and taxes. Consult with your tax advisor regarding how aspects of a 529 plan relate to your own specific circumstances.