College Savings Plan Is Worth a Look

BY STEVE DINNEN

It’s National College Savings Month (and it’s also National Trucker Appreciation Month). To celebrate (higher education, not truckers), Iowa College Savings Plan will reward some lucky enrollee with $1,000.

You don’t need a merchandising lure to know that the state’s 529 Plan (that’s the IRS code that governs it) can be a pretty decent savings vehicle for people with children or grandchildren facing college tuition. Iowa’s 529 Plan has respectable earnings spread out over 14 options. The highest flyer, an aggressive growth fund managed by mutual fund giant Vanguard, has earned a 12.13 percent return each of the past five years.

Contributors get an annual deduction from state taxes for money they pay in—the maximum deduction per year per beneficiary is $3,239—and earnings are tax-deferred. At the state level, qualifying withdrawals are tax-free. And unlike many tax-favored savings and investment accounts, there is no income cap for contributors. You just can’t contribute once the aggregate amount of the plan reaches $420,000, which hopefully will be enough to fund junior’s education. 

Both UGMAs (Uniform Gifts to Minors Act) and UTMAs (Uniform Transfers to Minors Act) may qualify for the plan.

Reach out to them—and maybe their prize—at 888-672-9116 or https://www.collegesavingsiowa.com.