David Lerner Associates: Who Can Benefit From College Savings Plans?

David Lerner Associates: Who Can Benefit From College Savings Plans?

Core Facts

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There are many types of people who can benefit from college savings plans especially parents and grandparents of young children, casual investors, or anyone wanting to transfer wealth to another family member as part of an estate plan. 

But the people most likely to benefit from these plans are the children themselves -- obviously. Keeping your child out of a bottomless pit of student loans is probably the best thing you could do for their finances. 

Student loan debt in the United States now exceeds $1.1 trillion with 39% of millennials reporting that being worried about money and their financial future is a weekly concern.

Higher investment accounts, known as 529 plans, have excellent tax advantages and offer savings for college as well as federal and state tax breaks on earnings.

Here are some types of people who would especially benefit from these 529 plans. 

1. Casual investors

529 plans offer packages of investments based on the age of the child, the beneficiary. Parents who don’t have much expertise or experience with investing can invest in these plans which get progressively more conservative as the child reaches college age.

2. High tax states

If you live in California and suffer a 13.3% income tax (or any other high-tax state), then you’d benefit the most from having an income tax deduction. States differ in their limits for deductions on annual contributions, and it would be wise to check with your state's treasury office for tax laws.

3. Grandparents

Grandparents who want to contribute money to their grandchildren’s future but don't want to give up control of the funds, have the option to open a 529 plan in their own names with the grandchild listed as the beneficiary.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

Certain investments are offered by prospectus. Investors should read the prospectuses carefully and consider the investment objectives, risks, charges, expenses and other information before investing.  

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.



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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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