In recent years, college tuition costs have soared. Per CollegeCalc.org, the average annual tuition at a public four-year college is $10,927 for an in-state student (a 1.06% annual increase) and potentially over two and half times that for an out-of-state student.1 According to the site, it’s about $26,695 at Nevada State College, for example.2 Tuition at a private four-year college averages $29,015.3 And those figures don’t account for room and board, books, and other expenses. To make it easier to estimate the total college expenses for yourself or your child, you can use an online calculator such as the one offered by Nevada State Bank.
Could you pay for a year of college today? Most families would find these tuition costs a hardship, which is why 529 College Savings Plans make so much sense. Named after Section 529 of the Federal IRS Tax Code, 529 plans offer parents the opportunity to set aside thousands of dollars for tuition, to prepare for those tuition bills in the future.
An Overview of 529 College Savings Plans
It’s never too early to start saving for a child’s education. In fact, the earlier you begin a systematic savings program, like a 529 plan, the easier it may be to build a balance to offset rising tuition costs. Investments in a 529 College Savings Plan grow tax-free. This means all of your investment works by growing interest and dividends without paying taxes.
Withdrawals to pay college or post-secondary education expenses are also free from taxation, so the more you deposit in a 529 plan, the more you can save on your tax bill today, and well into the future.
529 plans are managed state-by-state, and each state operates under different guidelines. The state of Nevada offers generous subsidies in the belief that an educated population is a valuable resource in attracting new business to our state.
Nevada’s 529 College Savings Plans
Nevada offers residents several payment and savings options to simplify college tuition savings. There are five Nevada 529 plans from which to choose. All five plans offer an option called the Nevada Prepaid Tuition Program, which allows Nevada families to purchase tomorrow’s college tuition at today’s rates. When the student is ready to use his/her benefits, the program will pay for the number of undergraduate credit hours previously purchased. With tuition rates rising each year, parents have the option of locking in a lower tuition rate today, even if their child is just starting kindergarten.
Another option is to invest a little each month into managed mutual funds, including the Putnam 529 America Plan, the State Street Global Advisors (SSgA) Upromise 529 Plan, the Vanguard 529 Savings Plan and the USAA 529 College Plan.
Regardless of which savings option you choose, your investment in your child’s future is closely monitored by the Office of Nevada’s State Treasurer. Nevada’s Treasurer, Dan Schwartz, recently commented, “The Nevada Prepaid Tuition program has already helped so many Nevada families. College tuition continues to rise. Don’t miss this chance to start saving for your child’s future.”4
When your child is ready to head off to college or technical school, your 529 assets can be used for any legitimate school expense, including: tuition, fees, room and board, books and equipment and a long list of other expenses defined by the IRS.
Other Benefits of Nevada’s 529 College Savings Programs
Nevada wants you to save for your child’s education, so the state makes enrollment in one of its programs simple.
- The maximum contribution limit for all Nevada 529 plans is $418,000.
- If you make a contribution of between $14,000 and $70,000 you can treat the contribution (as made over a period of five years) as a gift for tax purposes – a benefit for families catching up on tuition savings.5
- Unlike other college savings plans that turn over ownership to the beneficiary when he or she reaches 18 years of age, with a 529 Plan, the parents remain in control of the balance in the plan and determine when, where and how monies are allocated.
The Silver State Matching Grant Program
The Silver State Matching Grant Program is an incentive to save for tuition expenses by providing additional funding for families with a household income of less than $74,999.
- Families must reside in Nevada to take advantage of this grant program, and savings must be held by the SSgA mutual fund family.
- You must be approved for the grant program.
- Qualified families receive up to $300 annually, or a lifetime maximum of $1,500, to offset college expenses.
- To learn more about the Silver State Grant Program, or to apply, visit https://NevadaTreasurer.gov and click on “College Savings Plans.”
Many affordable college savings plans are available in Nevada. Sign up today to help your child plan and finance their future.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.
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