New Baby? Easily Start Saving!

Presented by: Matthew D. Bennage – Financial Advisor
Weller Group, LLC.  6206 Slocum Rd, Ontario, NY 14519. (315-524-8000)

I am a first time father with a four month old named, Olivia Grace.  Naturally being a planner and wanting to limit her one day college debt the first financially related strategy my wife and I did for her was set-up a New York State (NYS) College Savings 529 Plan.  We did this through NYsaves.org.  The investments are cost effective and the 529 plan allows for a tax deferred way for us to save for Olivia’s college tuition and related expenses*.  This account allows my wife and I to make one-time additions or systematic ongoing contributions.

There are a range of “set it and forget it” investment options, or for people like me, the program also allowed us to pick from a number of investments to create a personalized investment portfolio.  Other things to note are as long as we use this money for Olivia’s higher education all of our contributions and the interest the account has earned comes out completely tax-free!  My wife and I also get a NYS tax deduction for any contributions we make within the tax year (up to $10,000 if filing married jointly and $5,000 single).  Also, if Olivia eventually obtains a large scholarship (and does not need all or most the money within the account) my wife and I can transfer the dollars to one of her future siblings or family members.  NOTE: there are restrictions to whom these dollars can pass to.  Please visit nysaves.org for further details.

Also, keep in mind based on your objectives and financial situation there are several other college and educational savings tools available that include: UTMA’s, UGMA’s, Coverdell’s, Pre-paid tuition plans, Cash value life insurance, and individual mutual funds.  Each have their own characteristics and uses that may differ from a 529 plan. Please consult a financial professional regarding your individual situation.

Happy planning!

*Different states have different features and you should carefully evaluate your options. Also consider if you, or your beneficiary’s, home state provides its taxpayers with favorable tax and other benefits that are only available through the home state’s 529 plan

Securities and advisory services offered through Commonwealth Financial Network, Member www.FINRA.org/www.SIPC.com, a Registered Investment Adviser.

The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that a college-funding goal will be met. In order to be federally tax-free, earnings must be used to pay for qualified higher education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10-percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.