May is a month full of high school graduations and it is also the time officials with College Savings Iowa want the parents of future graduates to think about saving. Iowa’s savings plan is known as a “529” plan, and May 29th is designated as “529 College Savings Day.” Karen Austin with the State Treasurer’s office says they are running a contest to bring more awareness.
Austin says they are promoting College Savings Month by encouraging people to sign up for an account and register to win an account worth $5,290 at the College Savings Iowa web page. Austin says there are ongoing incentives for saving. “We know that it’s a big challenge for people to do that, so we provide tax advantages to people for savings,” Austin says. “So if they put their money in, they can get a state tax deduction, and the interest is deferred until they make a withdrawal. And then if it is used for a qualified expense, then there are no federal or state taxes paid on the income earned on the account.”
Thousands of students are graduating high school and just getting ready to go to college. Austin says parent can still save for them, while others can start saving for the future of their toddlers.”We always say it’s certainly never to late — and it’s never ever too early to start,” according to Austin. “So we really encourage people when you have time on your side when your children are young, that’s really when you can make the most of saving regularly and saving smaller amounts.”
With college costs continuing to rise, Austin says you should put as much money away as you can for your child’s future. “Certainly you can never save too much,” Austin says. It only takes $25 dollars to start an account, and the accounts are not limited to parents.
“Anybody can open an account for child. If you want to get the tax deduction — which is this year $3,163 per beneficiary. So, if grandma and grandpa want to open up their own account, they can get that deduction, if not then they can give that money to mom and day and they can put that money in their account,” Austin says.
To find out more about starting a College Savings Iowa account, go to www.CollegeSavingsIowa.com or call 1-888-672-9116.