Is it true what you've heard about 529s?
fiction: A 529 plan can only be used at schools in your home state.
fact: You can use the assets at any eligible higher education institution around the country and abroad — not just in Idaho. That includes 2- and 4-year colleges, graduate schools (including law and medical), and vocational/technical schools.1 For a list of eligible schools, visit the U.S. Department of Education. The IDeal plan can also be used to pay for registered qualified or eligible apprenticeship programs, or qualified K-12 tuition expenses up to $10,000 per year, per student at K-12 public, private and religious schools.
fiction: You can only use 529 plans to pay for tuition.
fact: You can use your account assets for any qualified withdrawals. Qualified withdrawals for higher education include tuition, mandatory fees, certain room and board costs, laptops and computers, and supplies.2 Other qualified withdrawals include K-12 tuition expenses up to $10,000 per year, per student at K-12 public, private and religious schools, expenses for registered qualified or eligible apprenticeship programs, and student loan repayments up to $10,000 lifetime, for the Beneficiary or a sibling of the Beneficiary.
fiction: It costs a lot to open and maintain an account.
fact: Most plans have low minimums. You can open an IDeal — Idaho College Savings Program account with only $25. To help families save more, IDeal offers additional programs, like Ugift® − Give College Savings, which allows account owners to invite family and friends to make gift contributions, and Upromise®, a service that lets account owners earn college savings when they shop online, dine out, and more.3
fiction: You have to make a lot of investment decisions.
fact: 529 plans have several investment types to meet your needs. IDeal offers three types of investments. Three Age-Based Options offer adjusting portfolios in which the investments get more conservative as the beneficiary gets closer to college age. There are also six Fixed Asset Allocation Portfolios that let you create your own investment strategy and a third option of an FDIC-insured Savings Portfolio.4
fiction: It's too late to start a 529 plan.
fact: It's never too late. Even if your student is in high school you can benefit from a 529 plan. IDeal earnings grow tax deferred, and when you withdraw the money for a qualified expense, it's federal tax free.2 Idaho taxpayers can deduct up to $6,000 ($12,000 if married, filing jointly) annually from their state adjusted gross income for contributions for tax periods beginning January 1, 2017.
fiction: I make too much money for a 529 plan account.
fact: There are no income limitations for a 529 plan. In fact, as part of the tax advantages offered by a 529 plan, account owners can contribute $15,000 ($30,000 if married, filing jointly) in a single year without incurring a gift tax.
fiction: A 529 plan is only for kids.
fact: Are you considering career retraining or an advanced degree? There's no maximum age for a 529 plan. As long as your school or program is eligible, you can use your 529 plan assets — even if you're not attending full-time.
fiction: If the child doesn't go to college, you lose your money.
fact: Unlike other college savings options, a 529 plan account owner controls the account. That means you can change your beneficiary to another eligible "Member of the Family" with no tax penalty.6
fiction: Only a parent can be an account owner.
fact: Parents, grandparents, aunts, uncles, friends...almost anyone can be an account owner.7 You can also open an account for your own education.
fiction: It's difficult to open up a 529 plan account.
fact: Most 529 plans let you open an account online. It doesn't take long to open an IDeal account at idsaves.org.