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| Milestone Consulting, LLC

529 PlansIn our settlement planning practice, our experts frequently assist with college planning. Opening a 529 plan can facilitate simple and effective savings growth for higher education. It’s a helpful option for parents who have obtained a settlement from a personal injury lawsuit involving a spouse who passed away.

A 529 plan is operated by a state or an educational institution. It provides tax advantages, possibly in addition to other incentives that make it easier for the beneficiary to save. There are two basic types of 592 plans: prepaid tuition plans and savings plans. The specifications of 529 plans differ from state to state, but no matter what, the monies invested including the interest and or growth are available for qualified education expenses on a tax-free basis.

Benefits of 529 plans include:

  • Tax breaks
  • The donor of the plan stays in control. Parents or grandparents who open a 529 plan as a gift are in control, unlike a Uniform Gift to Minors Act (UGMA) plan where the beneficiary takes control at age of majority (typically 18).
  • Low maintenance and low expense
  • Flexibility of investments and contributions

Each year, Morningstar rates the available 529 plans across the nation based on five key pillars: Process, People, Parent, Price, and Performance. The publication also considers the benefits individual plans offer to those saving for college, such as local tax breaks, grants, and scholarships.

This year, the Morningstar’s “Gold” rated plans are as follows:

Vanguard 529 College Savings Plan (NV)

  • Expense:  .17%-.45%
  • Minimum Account Value: $1000 (resident) & $3000 (non-resident)
  • Investment Options – Vanguard
  • State Tax Advantages – No

Utah Educational Savings Plan (UT)

  • Expense: .00% – .21%
  • Minimum Account Value: No Minimum
  • Investment Options – Vanguard, Dimensional Mutual Funds, FDIC Account, Public Treasuries Fund
  • Tax Advantages – up to $3000 deduction (state resident)

Virginia 529 inVEST (VA)

  • Expense: .12% – .77%
  • Minimum Account Value: $25
  • Investment Options: Vanguard & Parnassus
  • Tax Advantage: up to $4000 Deduction (state resident)

A 529 plan is a great consideration for minors who are preparing for higher education and the expenses that go along with it. Making sure the settlement accomplishes this important life goal is a strong recurring planning challenge. Contact the settlement planning experts at Milestone Consulting to discuss your options.

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