What To Consider When Setting Up A 529 College Savings Plan

How many parents take the step to set up and regularly fund a college savings account for their kids? This type of account is known as a 529 College Savings Plan.

What is a 529 College Savings Plan?

Simply put, a 529 College Savings Plan is a tax-advantaged savings plan designed to help pay for a college education or qualified trade school (also known as a qualified apprenticeship program).

This plan is named after section 529 of the IRS code.

Originally limited to post-secondary (undergrad) education costs, it was expanded to cover K-12 education in 2017 and trade school programs in 2019.

The purpose of these savings plans is to help individuals or families save for college, save in a tax-advantaged way, and save early in the easiest way possible.

SavingforCollege.com calculates that only 18% of children in the country have college savings account set up for them.

Does it seem complicated?

I’m writing to tell you how easy it is to set up a 529 College Savings Plan for your child, or children. Especially in Nevada. You can start for as little as $15 to open an account, and fund the account for as little as $15 per month— and go from there.

I am sharing this information as a Mom and friend. I’ve been through this process recently. I want to share my experience with our NV Moms community!

There’s a National Day to Recognize the 529 College Savings Plan

You learn something new every day!

National 529 Day is recognized on May 29th (5/29, get it?), highlighting the importance of 529 savings plans in helping families plan and pay for college or apprenticeship training expenses.

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Education is an Investment

According to the Bureau of Labor Statistics, individuals 25 or older who held a bachelor’s degree had median weekly earnings 60% higher than those with a high school diploma alone.

529 plan nevada

You Can Shop Local: The SSGA UPromise 529 Plan

I am focusing on SSGA UPromise because I looked into many others, and this one is literally the easiest and offers a free (online) informational meeting with an advisor.

As a prospective parent, I can tell you this was important for me. (read on and I’ll include a link to register if you’re interested)

This plan is sponsored by the State of Nevada and the Board of Trustees of the College Savings Plans of Nevada. The program is managed by Ascensus, (who offers free zoom meetings every Tuesday) and investments are managed by SSGA— State Street Global Advisors.

The truth is you can set up a 529 College Savings Plan that is sponsored in any state, regardless of where you live. I am focusing on this plan in Nevada— but nice to know that Nevada has 5 really good plans available for parents to choose from.

Benefits of The SSGA UPromise Plan

This plan is so easy to start and has low-cost investment options. You can invest as little as $15 per month into this account.

There are four investment types to choose from— designed to match the level of risk you are comfortable taking. I personally like the conservative choice!

There are low minimums, no enrollment fee, and if you are a resident of Nevada, your annual account management fee is waived.

The maximum you can save in this account is $500,000.

Informational Tuesdays

Did you know that every Tuesday you can participate for free in an hour-long Zoom meeting with a financial professional that is based here in Reno?

You can learn about Nevada’s SSGA Upromise 529 Plan. Find out how you can start saving from a live person. You can ask questions or participate in a Q&A at the end.

I did just that! I can’t tell you how helpful it was. I was comfortable to take the next step— to open a 529 College Savings Plan for my son, age 4.

Here is the link to register for the recurring Tuesday Zoom meeting.

All You Need is an Account Owner and a Beneficiary

The 529 College Savings Plan is typically established by parents or grandparents on behalf of a child or grandchild, who is the account’s beneficiary.

There is also a lot of flexibility within that. Read up on the SSGA’s flexible owner and beneficiary assignments.

The 529 Plan is “Tax-Advantaged”

Money in the account grows on a tax-deferred basis until it is withdrawn. As long as the money is used for qualified education expenses, as defined by the IRS, those withdrawals aren’t subject to either state or federal taxes.

Year after year, your small monthly investments grow and earn money.

Funds must be used to finance qualified education expenses (like tuition, books, supplies, computers, and room and board).

One misconception is that a 529 College Savings Plan will negatively affect your child’s ability to receive financial aid awards.

In truth, the funds you set aside in a 529 College Savings Plan will have a minor impact on your child’s financial aid award each year. Having those funds available will drastically reduce the total amount of student loans you need to apply for each year.

university of nevada

College Costs Continue to Rise

The College Board reports that a moderate college budget for an in-state student attending a four-year public college in 2020-2021 averages $26,820 per academic year.

For out-of-state students at public colleges, the average budget comes to $43,280 per academic year.

For students attending private colleges, the average budget is $54,880 per academic year.

Before you panic, read on!

Most Students Receive Financial Aid

No one is paying full price for college. When it comes time to pay for college, undergrads receive an average of $15,000 in financial aid per year.

Aid packages are in the form of grants, scholarships, work-study, or student loans.

Think of the money you set aside in a 529 College Savings Plan to assist with these rising costs. As I said, having funds available right upfront will drastically reduce the total amount of student loans your child will need to apply for each year.

What if the Beneficiary doesn’t go to College?

This is a great question. As of 2019, a new law allows 529 funds to be used to pay for a qualified trade school (also known as a qualified apprenticeship program), which typically combines on-the-job training with classroom instruction.

To qualify, the apprenticeship must be registered with the federal Labor Department.

The U.S. Department of Labor’s Office of Apprenticeship has established apprenticeships in over 1,000 occupations in a variety of industries.

The account holder can also change the beneficiary to another family member, like a sibling.

As a last resort, the account holder can withdraw the money, but it will be a “non-qualified” withdrawal and will be subject to federal, state, and local taxes, in addition to a 10% penalty tax.

529 Funds to Repay Loans

Under a new law signed in 2019, up to $10,000 from a 529 account can be used to repay the beneficiary’s student loans.

SSGA has Perks for NV Residents

The Silver State Matching grant is available to Nevada residents. You can read more about what it takes to qualify if you are approved, and the application period.

Basically, this grant will match your yearly contributions up to $300 per year with a lifetime maximum of $1500.

UPromise Mastercard

If you already have a credit card you use to build rewards and get cashback, why not have one that delivers the cashback directly into your child’s savings account? UPromise has a Mastercard that does just that.

Cardmembers earn 1.529% cash back for purchases with this affiliated credit card when it is linked to an eligible 529 College Savings Plan. Shop online, book travel, use at restaurants, buy groceries.

UGift Might be my Favorite Perk!

This is so smart. If you set up a 529 College Savings Plan you can have your child’s grandparents or other family members make a gift donation to your child’s college account for birthdays or holidays.

It is super easy to navigate and what a great gift idea!

Payroll Direct Deposit is Available

You can enroll online to fund the account through payroll direct deposit from your paycheck. You can contribute as little as $15 per pay period.

unr 529 college savings plan

Just do it!

In the end, most 529 College Savings Plans are about the same. These plans are tax-deferred savings accounts to support the academic education (or qualified trade school) expenses for your child once he/she is 18.

You put money in, let it grow, and don’t touch it.

The one difference with SSGA UPromise is that you can open this account for $15. For most others you need to open an account with $1000.

Nevada has 5 good plans you can compare and contrast. Vanguard is also a good choice and has a solid reputation.

Do you have a college savings plan for your child? If not, would you consider it?

Maureen Lowe
Maureen Lowe

Maureen Lowe is a Bay Area native that relocated to the high desert mountains of Southwest Reno with her family in 2017. Mama to her active pup and toddler boy, Maureen is a textile designer and graduate of CCA San Francisco. With a lifelong love of nature and the arts, Maureen has made it a mission to explore Reno’s scenic trails and cultural offerings to find kid and dog-friendly outings that work in all seasons.