What's a 529 Plan?
529 Plans offer tax-advantaged investments to encourage saving for future education expenses of a designated beneficiary (commonly one's child or grandchild). States offer and administer these plans, named after Section 529 of the Internal Revenue Code. Wisconsin's two plans, Edvest and Tomorrow's Scholar, are managed under contract by TIAA-CREF Tuition Financing, Inc. and Voya Investment Management.
All withdrawals from 529 plans for qualifed education expenses remain free from federal income tax. Wisconsin (and most states) mirror the federal rules for state tax purposes. Allowed expenses for higher education include tuition, books, software, computers and related technology, room and board, and some other fees. Elementary and secondary school tuition only, up to $10,000 per beneficiary each year were added as allowed expenses in 2018. Some states allow additional tax benefits for certain new contributions, usually for that state's plan(s). Currently, Wisconsin residents are allowed a subtraction from their state taxable income of up to $3,340 per year per beneficiary. Residents of other states should check to see if your home state plans affect tax benefits, scholarships, or creditor protection.
Variety of investment choices
Investments in 529 plans, including Edvest and Tomorrow's Scholar, look much like a 401(k) or IRA retirement plan that includes mutual funds or similar investments. You choose among aggressive stock portfolios, blended portfolios of stocks and bonds, a guaranteed interest account, and even a CD portfolio depending on your preference and investment objectives. There are also enrollment date tracks where the underlying investments become more conservative as the beneficiary becomes closer to the college years. You may also select risk-based investments that remain in the same fund or combination of funds regardless of the beneficiary's age. Investors are advised to carefully read the Program Description materials to understand the investment objectives and related risks for the choices you make.
Eligibility and Coverage
For more information on direct-sold Edvest, go to www.edvest.com. Tomorrow's Scholar is only available through financial advisors and fee-only planners.
Check with your home state's 529 plans, which may affect residents' tax benefits, scholarships, or creditor protection. A list of other 529 plans is at www.collegesavings.org.
Prior to July 2011, the Wisconsin 529 College Savings Program was attached to the Office of the State Treasurer (OST). With 2011 Wisconsin Act 32, the program was transferred to the Department of Administration. 2017 Wisconsin Act 57 then transferred all activities, communications, and duties of the program to the Department of Financial Institutions in September 2017.
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