Santa Fe, NM, Nov. 17, 2020 (GLOBE NEWSWIRE) -- As the end of the year approaches, it’s an ideal time to look at finances, tax planning and, of course, holiday gifts. The Education Plan®—New Mexico’s 529 college savings plan—provides a wide array of tax benefits, as well as investment and estate planning options.
“Whether you’re looking for a smart investment that will grow tax-free and provide a lasting difference in your or your loved ones’ lives, or you’re planning your estate, a 529 savings plan is a great choice,” said Ted Miller, Executive Director of the Education Trust Board of New Mexico, the state agency that administers The Education Plan®. “Contributions are tax-deductible on some state income tax returns, and earnings grow free of state and federal taxes. Withdrawals are also tax-free when used to cover qualified education expenses.”
In addition to tax benefits, 529 accounts can be used for gifting and estate planning. Contributions to a 529 account for a beneficiary are considered gifts. A donor can gift up to $15,000 annually per 529 beneficiary with no federal estate and gift tax impact if total of all gifts does not exceed $15,000. Under federal tax law, a donor can front load five years of gifting—or $75,000 per person, which can be repeated in year six. In the event a donor dies before the five years are up, a prorated portion of the contribution will be considered part of the donor’s taxable estate.
The Education Plan® can be used to cover tuition, housing, meal plans, books, supplies, computers and fees at any traditional college, community college, professional school, or trade school in the country.
“Whatever stage of life you may be in, investing in education is always an important factor in future planning,” added Miller. “As we look ahead to 2021 and a new year for investing and gifting, it’s a great time to take a look at your options.”
To learn more about the Education Plan, visit TheEducationPlan.com or call 1-877-337-5268.