The Corporate 529 Plan

College Funds (529 Plan), Investing & Retiring

If you have spent any time speaking to a recent college grad, you’ve likely heard the grumbles. Spiraling college costs have wreaked havoc in their financial lives, with debt piled high before beginning their first job. The thought of grad school is often an unreachable dream, because there isn’t any money put aside for this, and having to incur still more debt is daunting.

Put simply, higher education is getting more expensive with each passing year, far outpacing the level of inflation.

In addition, as college tuition continues to skyrocket, so do student debt levels – which, according to the Consumer Financial Protection Bureau, recently surpassed the trillion- dollar mark, eclipsing credit card and auto loan debt for the first time. Making things worse, many federal and state funding programs have been slashed in recent years.

The upshot of all this is that an increasing number of middle- and lower-class American families are getting priced out of higher education. This needs to change.

Virtually everyone has a stake in making college more affordable and increasing the level of education in this country, from families to local communities to businesses and employers of all sizes.

So what’s the solution?

It’s simple: Corporate 529 plans. They should be as common as 401(k) retirement plans, which are a part of employee compensation packages at many companies.

First, some basic background about a 529 plan. It is a dedicated and flexible vehicle for individuals to set aside money for education expenses, whether it is for themselves, their children, grandchildren or even a friend (as the beneficiary does not have to be a blood relative).

Under a corporate 529 structure, employees can contribute after-tax dollars to the account, which then has the opportunity to grow free of federal taxes. And as long as the money is used to pay for qualified-school expenses, it remains tax-free.*

Ultimately, there’s very little reason that corporate 529 plans cannot do for college tuition what 401(k)s have done for retirement, which is to make it more affordable and accessible to a wider spectrum of Americans.

Please view the video accompanying this article – or give me a call – to learn more about the corporate 529 college savings plans.

* Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Winnie Sun is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Sun Group Wealth Partners, a registered investment advisor and separate entity from LPL Financial

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

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