Scholars Choice: a scholarly choice

The Scholars Choice Education Savings Plan is comprised of funds from Nuveen, TIAA and other leading asset managers

It also has tax advantages for multiple states, with added benefits for Colorado residents. In fact, if you are a Colorado taxpayer, up to $22,700 for single tax filers per beneficiary, or $34,000 for joint tax filers per beneficiary can be deducted from your Colorado taxable income!

• Benefits of 529 plans
• Scholars Choice: the right plan
• Balancing saving for higher education with retirement
• How much to save?
• Benefits of working with a financial professional

Benefits of 529 Plans

It’s never too early to prepare for a loved one's successful future. No matter what their age — with the rising cost of tuition — the time to start is now. Every dollar you can pay for school upfront can equal more than two dollars your loved one won’t need to repay in student loans down the road. This can make saving one of the most cost-effective education funding options out there.

Scholars Choice is a state-sponsored, tax-advantaged 529 savings plan that’s helping families and individuals plan for the cost of education. It is available to any citizen or tax payer, and just about anyone can help contribute including grandparents, aunts & uncles and more. There are a variety of low-cost investment portfolios to choose from including enrollment-year based, target allocation and individual fund options.

In addition, a 529 plan offers certain gift and estate tax planning benefits that can be discussed with your tax professional. And withdrawals are tax-free at both the federal and state level when used for qualified education expenses.

You can use the funds for a lot more than just tuition — including required fees, certain room and board costs, books, supplies, as well as computers and related technology costs such as internet access fees and printers. Funds can be used at most accredited colleges and universities in the United States — even certain colleges abroad. And now withdrawals can also be used to pay for up to $10,000 per year of tuition at public, private or religious elementary or secondary schools (K-12).

In fact, Qualified Education Expenses also include expenses for fees, books, supplies and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act; and up to $10,000 repaid (including principal and interest) on any qualified education loan of either a 529 plan designated beneficiary or a sibling of the designated beneficiary. To be a qualified expense, the loan repayment amount for an individual is subject to a lifetime limit of $10,000.*

If you’re worried about having the account in one state and attending school in another, don’t be. With most plans, your school choice is not affected by the state of your savings plan. For example, you can be a resident of Colorado and send your student to school in California.

Scholars Choice: the right plan

Favorable tax treatment

• Tax-deferred growth: your investments will continue to grow tax-deferred as long as the money remains in the account.
• Tax-free withdrawals: Withdrawals used to pay for qualified higher education expenses are not subject to federal income tax and are excluded from state income tax in nearly all states. Withdrawals can also be used to pay for up to $10,000 per year in tuition at private or religious elementary or secondary schools (K-12). The tax consequences of using 529 plans for elementary or secondary education tuition expenses may include recapture of tax deductions received from the original state as well as penalties.^*
  
  Note: Some states (such as Colorado) do not offer state tax deductions or tax credits for K-12 tuition and other restrictions may apply.
• Estate planning benefits: Contributions are considered completed gifts, meaning they are excluded from your federal taxable estate. In fact, contributions made to a 529 plan benefit from a special gift tax provision.

Significant flexibility

• Account owners maintain control of the money and the assigned designated beneficiary.
• Recurring contributions available across multiple frequencies and amounts

uGift^®:

• With the Ugift option, you get an easy, secure way to ask friends and family for electronic gift contributions. The service is included when you open your account and is free of charge.
  
  Note: Ugift^® is a registered service mark of Ascensus Broker Dealer Services, LLC.

Professionally managed

• An active, multi-manager approach across a wide range of investment options

Balancing saving for higher education with retirement 

While certain types of investment accounts like a classic IRA or Roth IRA can be used to pay for college, their ultimate purpose is to save for retirement. You don’t want your child’s education to come at the cost of your retirement nest egg, so it’s better to save separately and avoid using your retirement fund.

Remember, it’s not about covering all the costs for your child’s college — it’s about saving as much as you can. You still need to look to your own future! You don’t want to have to work longer or become a burden upon your children as they're building their lives. In simple terms, your children can get scholarships or financial help to pay for school, but as a retiree, you won’t have any such options.

How much to save?

In short, it all depends on your savings objective and risk tolerance. We encourage you to leverage the College Savings Calculator to get a detailed personalized view. In addition, you should always consult with your financial professional to develop a plan that is advantageous to your financial situation.

Work with a financial professional

A financial professional can discuss how a 529 plan fits your overall investment strategy and how you might want to tailor your savings plan. Whether you have been working with a financial professional for years or just starting to look for one, here are questions to help start the conversation.

1. What are the different ways to save for education goals?
2. What are the major differences between taxable, tax-deferred and tax-free accounts?
3. Are there any state-specific benefits based on the state that I reside?
4. What are the best investments options based on my objectives and goals?
5. How can I save for retirement while still saving for other large expenses like education?

Don't have a financial professional to work with? Find one today