Santa Fe, NM, Oct. 09, 2024 (GLOBE NEWSWIRE) -- National Estate Planning Week is October 21–27 and it is the perfect time to learn more about how 529 education savings plans can be used as an estate planning tool. By including a 529 plan in an estate plan, people can reduce their taxable estate, while investing in the future education of loved ones–providing both immediate and long-term financial advantages.
The Education Plan®, a 529 education savings program sponsored by the State of New Mexico, can help enhance estate planning, while empowering future generations. Contributions to a 529 account for a beneficiary are considered gifts for tax purposes. The federal annual gift tax exclusion allows for $18,000 for a single individual and $36,000 for married couples. One major opportunity for 529 plans is accelerated gifting - which allows people the opportunity to make five years of gifts in one year - $90,000 per person or $180,000 per couple at 2024 IRS gifting limits.
“Using 529 plans, grandparents can utilize the accelerated gifting and give to multiple grandchildren,” explained Natalie Cordova, Executive Director of the New Mexico Education Trust Board, the organization that administers The Education Plan. “This is a great way for grandparents to invest in their grandchildren’s future in a tax-advantaged way.”
In addition to allowing for accelerated gifting, 529 plans grow tax-free, and withdrawals used for qualified education expenses such as tuition, books, room and board, and more are not subject to federal income tax. This enables families to grow their education savings faster, without the additional tax burden.
"National Estate Planning Week is an important time for families to consider how they can plan for future educational needs while optimizing their estate planning strategy," added Natalie Cordova. "A 529 plan offers significant flexibility, allowing families to set aside funds for education in a tax-efficient manner, and also provides an opportunity to reduce their taxable estate."
The versatility of 529 plans makes them an attractive option for a variety of education-related expenses. The funds in a 529 plan aren’t limited to just traditional four-year colleges. Families can also use the savings to pay for K-12 tuition (up to $10,000 per year), vocational training, and even registered apprenticeship programs. Additionally, up to $10,000 from a 529 plan can be used to help repay student loans, providing flexibility for both beneficiaries and their parents.
“Education is one of the greatest gifts we can give to future generations,” said Cordova. “A 529 plan provides families with a purposeful financial tool to support lifelong learning, whether it's for college, technical training, or even K-12 education. “When planning your estate, consider looking ahead to future generations and contribute to a tax-advantaged 529 plan.”
For more information about The Education Plan® and how a 529 plan can enhance your estate planning efforts, visit www.TheEducationPlan.com.
