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Save Smarter for College

Saving money for college can be easy with a 529 college savings plan.
It’s simple to save for your kids’ education and claim tax benefits along the way.

Core benefits of a 529 savings program

01

Professional investment management

Grow college savings with expert guidance. Most states manage their 529 savings programs through investment firms or mutual fund companies, meaning experienced professionals use investment strategy to maximize your plan’s growth potential.

02

Flexibility

Your student gets a full ride? College plans change? No problem. Change the account beneficiary to another family member at any time. You can even roll over your 529 account to a different state’s 529 plan once per 12-month period without triggering federal taxes.

03

Generous contribution limits

Federal law doesn’t limit annual 529 plan contributions. Lifetime limits are usually over $400,000, and minimum contributions are often low, $25 or less in many states. That means you can choose the savings pace that’s right for you, whether that’s baby steps or full speed ahead.

04

Control

Sometimes, Mom and Dad really do know best. You hold ownership and control over a 529 account you open, so you have the final word about the funds. You decide when to withdraw money, how to spend it, and what to do with leftover funds (like save for grandkids).

Stack of money
Girl with map in hand

How to save for college

01

Set a savings target

Public or private? In-state or across the country? The type of college experience you imagine for your child affects how much you might need for tuition. Start by setting a savings goal that fits your finances and plans.

02

Out of sight, peace of mind

Take the stress out of college savings with automatic contributions. Most 529 plans offer automatic transfer from your bank account, so you don’t have to remember to save.

03

Minimize taxes

Your 529 plan contributions grow federal tax free and may qualify you for a state tax credit or deduction. Distributions from your 529 plan are exempt from federal tax as long as you use them for qualified education expenses, and in most cases from state tax as well. Finally, 529 earnings aren’t subject to the Kiddie Tax, so this option can help make the most of your savings.

04

Invite friends and family to help

Your parenting circle of support can also help send your child to college. Spread the word that loved ones can add to your 529 plan as a birthday, holiday, or graduation gift.

What you need to know about 529s

When to start saving for college

Earlier is better when it comes to saving for college. Saving early gives your account more time to earn returns—and compound those returns for even more growth. Starting as soon as your child is born means you’re likely to see a larger portion of your college savings come from investment earnings than if you wait until middle or high school years to get started.

Saving for kids’ college early also puts you in the habit of making college a priority before soccer teams, music classes and field trip fees compete for your attention and budget.

How much should I be saving for college?

College costs depend on some factors you can’t predict, such as scholarships your child may receive, and some you can, such as in-state versus out-of-state tuition. Some experts recommend aiming to cover about one-third of estimated costs. The remainder comes from scholarships, loans and your current income during your child’s college years.

Plan what kind of college experience makes sense for your family finances (such as a 4-year, in-state school) and priorities. If it’s important to minimize student loans, for example, you might aim to save half of expected costs in advance, instead of one-third.

How do you automate saving for college?

Automated savings are the best way to save for college consistently, no matter how busy you are. Generally, you can set up automatic transfers from your bank account when you open a 529 plan. Many 529 plans even offer lower minimum contribution amounts if you choose this option.

Your employer may allow you to deduct 529 plan contributions automatically from your after-tax paycheck. Ask your payroll department what form you need to complete to set up or change automatic payroll deductions.

The top 5 mistakes people make with their 529 plans

Simply opening a 529 plan isn’t enough. You have to manage the account carefully. Avoid these common mistakes to get the best benefits from your plan.

Assuming your money will grow.

A 529 plan is an investment account, meaning it’s possible to lose money if the market takes a hit. Diversify your portfolio and adjust the risk level over time to help protect your earnings.

Forgetting to adjust your asset allocation and savings rate:

Girl with magnifying glass

How to avoid taking on too much student debt

Many families are understandably worried about their kids taking on large student loans. Plan early and thoughtfully while time is on your side for your best chance at minimizing student debt.

Avoiding student debt is part preparation, part setting reasonable expectations. You can plan to dedicate a portion of windfalls or tax refunds to college savings. Consistent contributions (and a little extra kick from additional sources, like holiday gifts from grandparents) can grow a healthy college savings account.

The other part of the equation is setting realistic goals. Consider a savings target that’s reasonable for your family, and think about what kind of college you can afford. Involving your high schooler in family discussions about which colleges are affordable can help all of you plan a college path that makes sense for your family.

Your 529 Cheat Sheet

Don’t need a 529 Plan?
You could probably still use life insurance.

Learn More

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Accidental Death Insurance policies (Form VL-ADH1 with state variations where applicable) and Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT (all states except NY), and by The Penn Insurance and Annuity Company of New York (NY only). Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

All sample pricing is based on a 25-year old F in Excellent health for the coverage amount shown. All samples are for a 10-year term policy, unless otherwise stated. Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT. Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

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