Skip to main content

A Plan For PA

College Savings That Grow As Fast As They Do

Kids grow up fast. That’s why there’s never been a better time to start a college savings plan. Whatever the loved one in your life wants to be, a college savings account with The Education Plan can help make it happen. With higher education costs continuing to outpace inflation, starting to save for college now can help your loved one graduate with less debt in the future.

If you are a Pennsylvania taxpayer, consider before investing whether or not your or the designated beneficiary’s home state offers a 529 Plan that provides its taxpayers with favorable state benefits, such as financial aid, scholarship funds, and protection from creditors, that are only available through investment in the home state’s 529 Plan, and are not available through investment in The Education Plan. Keep in mind that state-based benefits should be one of the many appropriately weighted factors to be considered when making an investment decision.

Here are just a few reasons to set up a 529 account with The Education Plan. 

1. Tax-Free Growth

One of the biggest benefits of opening a 529 account for college savings is the tax breaks. Unlike a traditional savings account, a 529 account benefits from tax-deferred growth and tax-free qualified withdrawals.

Federal Taxes:
  • Tax-Free Earnings. The earnings your 529 account generates are not subject to federal income taxes. This means any growth your account sees can be put entirely toward educational expenses without having income taxes taken out.

  • Tax-Free Distributions for Qualified Expenses. When you take money out of your 529 to use for qualified educational expenses, the distributions are not subject to federal income taxes. 

Pennsylvania State Taxes
  • As a Pennsylvania tax payer, you can deduct up to $15,000 in 529 contributions per beneficiary from your state taxable income. If you are married and filing joint, you can deduct up to $30,000 in 529 contributions.

  • Pennsylvania residents can contribute to any 529 plan and receive the state tax benefit. 

The combined federal and state tax benefits can add up to significant additional college savings, which will come in useful as college costs continue to rise faster than inflation.  

2. Low Fees & Flexible Investment Options

The Education Plan offers a range of professionally managed investments. You can choose an investment strategy based on when you will need to use the funds, or you can create a custom combination of the available portfolios to suit your needs.
The Education Plan has total asset-based fees of just 0.10 – 0.44%. This low fee structure allows you to put more toward your loved one’s future education.

3. Flexibility

In order to qualify for tax-free withdrawals, the funds in a 529 account must be used for educational expenses. This leads many people to worry that they may not be able to use the funds if their loved one receives a scholarship or doesn’t go to a four-year university.
A 529 plan is flexible enough to meet the needs of a variety of students in a shifting educational landscape. This includes covering tuition as well as other expenses that can get overlooked when families are planning for educational needs. In 2019, tuition accounted for just 39% of the average student’s total bill. 

A 529 Plan Covers:
  • Tuition

  • Computers and other technology needs

  • Fees

  • Room and Board

If one child doesn’t need to use the full amount in an account, a 529 plan can be transferred to another child in the same family without incurring fees.

4. You Don’t Have to Do It Alone

Saving for college can feel daunting, but you don’t have to do it alone. The Education Plan makes it easy for family, friends and loved ones to chip in with the Ugift program. You can quickly set up a code that is easy to share with the special people in your loved ones’ life. Even $10 as a birthday gift can start to add up.

5. It’s Easy to Set Up

You can open an account with The Education Plan quickly and easily with as little as $1.  And you can open an account for anyone, even someone who isn’t related. You just need a few pieces of information. Once you’re set up, you can arrange recurring contributions and manage the account easily online.