New Year’s Resolution: Commit to Saving for Education in 2023

 

New Year’s Resolution: Commit to Saving for Education in 2023

 

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As the New Year 2023 begins, consider an important New Year’s resolution that includes financial planning for a loved one’s future education with a 529 plan. One goal that is realistic and for which you can track progress is contributing to your child’s 529 education savings account with The Education Plan®. 529 accounts not only cover many college expenses, but also provide tax advantages and can help combat the rising cost of education, making it a practical, useful, and very doable resolution – one that allows you to watch your investment as the year progresses. Here are just a few reasons to commit to saving in 2023.

Tax Advantages

By contributing to a 529 education savings account, you will not only help your child better afford college, but also experience tax advantages for yourself. You pay no federal taxes on earnings or withdrawals, as long as the 529 funds are used for qualified education expenses. And, contributions are compounded, meaning that any earnings are reinvested in the savings account, and have the opportunity to grow over time. If you are a New Mexico resident, you may also claim an annual state income tax deduction for all contributions to the account if the funds are used to pay for qualified expenses. Traditional savings accounts do not provide these tax advantages.

Flexibility

Contributing to a 529 account for your children is not limited to a one-time resolution, but it’s an investment that has the potential to keep on growing. You may open an account for your children at any age, whether they are 2 or 20, at any time, with any amount (as long as your contribution does not go over the lifetime maximum of $500,000 per beneficiary).

Comprehensive Coverage

The funds from a 529 education savings account can be used for qualified education expenses. Qualified education expenses include tuition, room and board, textbooks, lab fees, computers, internet, and software, if they are used for academic purposes. Funds may be used at a four-year or two-year college, vocational school, professional school, community college, or graduate school nationwide. One caveat: if you spend the funds on non-qualified expenses, such as transportation or cell phones, your withdrawals are subject to tax and a 10% penalty on earnings.

Ease of Use

One of the easiest ways to contribute to a 529 education savings account is by setting up automatic payments from your bank account an Automatic Investment Plan. When you receive a raise or other salary incentive, consider increasing your automatic contributions to celebrate these accomplishments. With this relatively simple action, you can grow your child’s investment steadily over time. Lump sums from refunds, rebates, bonuses, gifts, or rollovers are also good investment sources. In fact, others may be similarly motivated to support your children’s academic aspirations through a gift contribution to your 529 account. The Education Plan makes it easy through Ugift, which provides a unique code that you can share with friends and relatives. Downloadable and printable gift certificates are also available.

The Smart Choice

Contributing to your 529 education savings account should be considered a priority throughout the year. Setting a commitment to contribute every month at the start of the year is a great way to make sure it continues to happen. It’s hard to believe, but soon your child will be looking forward to higher education. With the kickoff of a new year, be sure to make a lasting commitment to your children’s future education and help them graduate with less debt.

 

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC.

The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

All other marks are the exclusive property of their respective owners.

Not FDIC-Insured. No Bank, State or Federal Guarantee. May Lose Value.