Having trouble viewing this email? Click here to view the online version.

 


   


September 29, 2016

 
Frazer LLP
 
 

Hi There!,

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

  • Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
  • Some states offer tax incentives for contributing in the form of deductions or credits.
  • The plans usually offer high contribution limits, and there are no income limits for contributing.

Prepaid tuition plans

With this type of 529 plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at the time the beneficiary actually attends the school. This can provide substantial savings if you invest when the child is still very young.

One downside is that there’s uncertainty in how benefits will be applied if the beneficiary attends a different school. Another is that the plan doesn’t cover costs other than tuition, such as room and board.

Savings plan

This type of 529 plan can be used to pay a student’s expenses at most postsecondary educational institutions. Distributions used to pay qualified expenses (such as tuition, mandatory fees, books, supplies, computer equipment, software, Internet service and, generally, room and board) are income-tax-free for federal purposes and typically for state purposes as well, thus making the tax deferral a permanent savings.

The biggest downside may be that you don’t have direct control over investment decisions; you’re limited to the options the plan offers. Additionally, for funds already in the plan, you can make changes to your investment options only twice during the year or when you change beneficiaries.

But each time you make a new contribution to a 529 savings plan, you can select a different option for that contribution, regardless of how many times you contribute throughout the year. And every 12 months you can make a tax-free rollover to a different 529 plan for the same child.

As you can see, each 529 plan type has its pluses and minuses. Whether a prepaid tuition plan or a savings plan is better depends on your situation and goals. If you’d like help choosing, please contact us in Brea, 714.990.1040 or Visalia, 559.732.4135.


 
 
 
 
 

 

Our complimentary Webinar Series for Contractors continues on October 27, 2016, 10:00-10:45 a.m. Pacific. Register by clicking the button below.

October 27, 2016
Enhance Your Wealth With Targeted Tax Strategies

Another tax year end is approaching. It’s time to turn your attention to tax strategies that could lessen your tax obligation and enhance your wealth. Attend this webinar for a review of tax strategies that could accomplish both goals.

Presented by:  
Lou Rendon, CPA, MBT
Partner, Frazer, LLP

November 17, 2016
Take Advantage of Tax Credits

Are you aware of research and development (R&D) incentive programs? Are you taking full advantage of the R&D Tax Credit? Attend this webinar and learn about the broad range of common construction industry practices that qualify for the credit and how to claim the credits you deserve.

Presented by:
alliantgroup

Register Today!



 


 
 

Frazer LLP | 135 S. State College Blvd., Brea, CA
You received this email because you are subscribed to Marketing Information from Frazer LLP.
If you prefer not to receive emails from Frazer LLP you may unsubscribe or set your email preferences.