Santa Fe, NM, Aug. 23, 2024 (GLOBE NEWSWIRE) -- The back-to-school season marks an exciting new beginning as students embark on another year of learning. Each year, families are faced with increasing tuition and other costs which can be a challenge without proper planning. According to the CollegeBoard College Pricing 2023 report, in 2023-24, the average published tuition and fees for full-time undergraduate students at public four-year in-state institutions is $11,260, $270 higher than in 2022-23. Additionally, average tuition prices across all higher education institutions increased by over 3% compared to the previous year, before adjusting for inflation. For families aiming to invest in their child's education both in the short and long term, 529 plans can be a purposeful savings tool.
The Education Plan®, a 529 education savings plan sponsored by the State of New Mexico, offers numerous benefits for families planning for educational expenses. The Plan provides a tax-advantaged way to save for future education costs, including not just higher education but also K-12 tuition. Contributions to The Education Plan grow tax free, and withdrawals used for qualified education expenses are tax free. Contributions are tax-deductible on some state income tax returns as well. This makes 529 plans a powerful tool for managing the rising costs of education.
Specific benefits of The Education Plan include:
- Tax Advantages: Contributions grow tax free, and withdrawals for qualified education expenses are tax free.
- Flexibility: Funds can be used for higher education tuition, books, supplies, and room and board costs. With the recent additions to the federal tax law, 529 plans can now be used to pay up to $10,000 per year for K-12 tuition, apprenticeship expenses and more. This expansion provides families with more flexibility to choose the educational setting for their children from an early age.
- State Tax Deduction: Many states offer state tax benefits for contributions to a 529 plan. New Mexico offers a state tax deduction for contributions to a New Mexico 529 plan.
- High Maximum Contribution Limits: New Mexico’s 529 plans allow high lifetime maximum contribution limits of $500,000 per beneficiary, ensuring families can save adequately for their children's educational needs.
- Roth Conversion – Based on certain criteria, up to $35,000 (lifetime limit) in unused 529 plan funds can be rolled over to a Roth IRA for the beneficiary , giving families even more options.
“Like many future purchases we plan for, education costs continue to rise and it’s crucial for families to have a solid plan for managing those anticipated expenses. The Education Plan offers a versatile and tax-efficient way to save for a variety of educational needs,” said Natalie Cordova, the Executive Director of the New Mexico Education Trust Board, the organization that administers The Education Plan®.
529 plans are designed to make education more accessible by reducing out-of-pocket expenses and dependence on student loans. With flexible contribution options and a range of helpful tools, The Education Plan empowers families to invest in their children's future at any stage of their academic journey.
“A 529 plan can help families take control of their financial future and provide their children with options and opportunities,” Cordova added.
For more information on The Education Plan and how to get started, visit The Education Plan's website.
