0
law@orangecountyestateplanning.org
Estate Planning
| Home |
| The Firm |
| Estate Planning |
| Wills |
| Trusts |
| Health Care Directive |
| Power of Attorney |
| Contact Us |
Contact
Estate Planning 529 Plans | 529 Plans |
|
529 Plan Attorney Orange County, CA Appointments are available during regular business hours, evenings, and weekends Free initial telephone consultations
Benefits of a 529 Plan A 529 plan or a “qualified tuition program,” as it is technically called, allows a donor to create a tax advantage account to help pay for the higher education expenses of a loved one of the donor’s choice. Contributions to the 529 plan up to the gift tax exemption are free from gift tax. The overarching tax advantage of a 529 plan account is that interest earnings are not taxed. In addition, there is no tax when the funds in the 529 account distributed to be spent on qualified educational expenses. The donor retains control of such funds and can decide when and for what purpose distributions can be made, change the beneficiary, or even reclaim the funds.
How a 529 Plan Works A 529 plan is a savings account sponsored by the state. California offers a savings plan called The Golden State ScholarShare Trust, which allows contributions to the account to be invested in a variety of portfolios that vary depending on the risk preference of the donor and the age of the beneficiary. The donor may also choose to invest in another state’s qualified tuition program, if the out of state tuition program permits. Generally, each individual may make contributions free from gift tax up to the gift tax exemption per year which is $12,000 for 2008. This means that couples may contribute $24,000 per year free from gift tax. However, the 529 plan allows contribution in a single year to be five times the gift tax limit, which for 2008 is $60,000 per individual, so long as no other contributions are made to the same account in the following five years. Distributions of funds for qualified expenses, such as tuition, fees books, supplies, and room and board while attending school, are exempt from income tax.
529 Plan Attorneys As an estate planning firm based in Orange County, Ca, we provide comprehensive estate planning services including insights on college saving plans, educational trusts, qualified tuition programs, and 529 plans for a full range of clients from high net worth to working class. |