A state-sponsored 529 plan is an investment vehicle that allows you as the owner to contribute after tax dollars for your child’s higher education costs. The money that is invested grows tax free within the account, and the beneficiary can take distributions federal income tax-free, as long as withdrawals are used for qualified higher education expenses. That is a huge ‘double’ tax benefit. Another perk about these products is that you are the owner on the account and retain control throughout the history of the account. If your child decides not to go to college, you can easily change the beneficiary as many times as you like by assigning a new beneficiary to the account. You have control over successor owners of the account as well, so these plans can be passed down to your family members and between generations. The plans are state-sponsored, but you don’t have to choose YOUR state’s specific 529 plan, as most of them can be used anywhere. Another plus to these plans are the high contribution limits: a single person can contribute up to $70,000 in one year per beneficiary; married couples can contribute up to $140,000 in one year per beneficiary. Such high contribution limits help affluent families move assets out of their taxable estate into a potentially tax-free benefit. However, the high contribution limit is considered a five-year accelerated annual-exclusion gift, no additional gifts can be made for that beneficiary for that year and the next four years without creating gift-tax implications.

529 plans are invested in mutual funds either using a target date fund or by selecting from a wide variety of mutual fund choices. You, as the owner, have the option to select the asset-allocation-model alternatives, which may be changed twice every calendar year and/or with a beneficiary change. You can contribute lump sums or systematic monthly/yearly contributions. Not only are you able to jump start your education savings with a 529 plan, but the accelerated gifting technique allows you to reduce your estate by the gift amount and all subsequent appreciation.

Rhodes Securities, Inc. is happy to help guide you on this path to your children or grandchildren’s college savings plan. If you need further information please contact Gordon Rhodes at 817-334-0455.

Securities offered through Rhodes Securities, Inc. Member FINRA – SIPC. 306 W. 7th Street Ste 1000, Fort Worth, TX 76102. Insurance and investment advisory products offered through Rhodes Investment Advisors, Inc. All opinions are my own and do not necessarily reflect the opinions of Rhodes Securities and/or Rhodes Investment Advisors. Outside quotes and other financial information are from sources believed to be reliable but are not guaranteed in any way by myself or Rhodes Securities and/or Rhodes Investment Advisors, Inc. Past performance is no guarantee of future results. This is neither an offer to sell nor a solicitation of an offer to buy any individual equity, bond or mutual fund mentioned in this correspondence. Any tax advice presented in this correspondence should be understood through a tax advisor or CPA.

Gordon Rhodes was born and raised in Fort Worth, Texas and graduated from Texas A&M University majoring in Speech Communication and Business Administration. Upon graduating, he had a short stint in New York City as a production assistant in the T.V. industry and later as an associate producer in the independent movie realm before coming to work as a Financial Consultant. He is now President of Rhodes Securities, Inc. and co-owner of Frie Financial Inc. When he is not serving on various charitable boards or working, Gordon is either playing with his ten-year-old son, Andrew, and his seven-year-old daughter, Madeline, or hanging out with his extremely beautiful and talented wife, Julie!

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