529 Plans are one of the most popular savings vehicles for higher education, giving individuals a way to save on behalf of a beneficiary.  Also known as qualified tuition plans, 529 plans are “sponsored by states, state agencies or educational institutions and are authorized by Section 529 of the Internal Revenue Code [1].” 
Prepaid Tuition Plans: Prepaid tuition plans allow individuals to prepay tuition at its current rate.  Because this type of plan locks in the rate, it can help to ease concerns about inflation and the rising costs of a college and university level education.  However, many prepaid plans have specific residency requirements and/or guidelines for where a student may choose to attend college/university (typically in-state, public institutions).  At the time of publication, 16 states have an option for a prepaid tuition plan:
  • Alabama Massachusetts Tennessee
  • Colorado Michigan Texas
  • Florida Mississippi Virginia
  • Illinois Nevada Washington
  • Kentucky New Mexico West Virginia
  • Maryland South Carolina Wisconsin
  Education Savings Plans An education savings plan is a savings account made up of mutual funds, ETF’s, etc. from which funds can be used specifically for higher education purposes.  This may include, but is not limited to, tuition, fees, room and board, technology/equipment, and books.  Investors can typically be more aggressive with their investment strategies when children are younger.  However, as the child gets closer to college-age, it is usually recommended to switch to a more conservative approach. In 2018, a new tax law was implemented so that $10,000 per student per year can be used toward private elementary or secondary school (for tuition only). You can choose any state’s plan, regardless of your state of residency; however, each has its own set of fees and benefits.  For example, if you are a Georgia resident and you choose to invest in Georgia’s Path2College 529 Plan, you can claim a state tax deduction for your contributions.  
In addition to state-specific advantages, there are general benefits that all 529 plans provide:
  • Anyone can make a contribution
  • The plan can be transferred to any family member or beneficiary
  • No income limits—anyone can open and contribute regardless of their income
  • It is a low maintenance investment option
  • The plan owner, not a beneficiary, maintains control of the plan
  Tax Benefits Tax benefits vary from state to state, and it is always best to consult your accountant regarding your specific circumstances. But in general, the following benefits will almost always apply:
  • Withdrawals are not subject to federal taxes if taken for qualified expenses
  • Earnings grow tax-free
  • Contributions are typically exempt from gift taxes
  • Contributions may be fully or partially deducted from state income tax (currently in more than 30 states)
  • You may only be eligible if you invest in the 529 Plan from your state of residency
Before opening a 529 plan, you will want to research all available options.  If your state offers benefits for its residents, that may be the best option.  If not, you may find that another state’s plan will be a better fit. Once you have made a decision, visit the plan’s website to open the account and choose your investment options.  A money manager, like Howard Capital Management, Inc. (HCM), can then help you make the most of your investment.  
Many parents choose to open a 529 Plan as soon as their child is born, allowing the investment to grow for 18 years before using it for higher education. Your financial advisor may also suggest investing in a 529 Plan in conjunction with a Roth IRA to maximize your savings.   Contact Howard Capital Management, Inc. At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that will create and deliver on a personalized plan which has your best interest in mind. By planning for your financial future now, you can make saving for higher education an exciting and smooth process.


This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice. Howard Capital Management, Inc. may maintain long or short positions in the financial instruments referred to and may transact in them as principal or agent. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. Our proprietary indicator, the HCM-BuyLine®, identified changes in the market trend. Buys and sells may or may not have occurred on the exact dates shown. These dates do not necessarily reflect transactions applied to every individual account. Also, certain products, custodians and portfolios may have a delay in execution. When the HCM-BuyLine® indicates a bull market, HCM then identifies the particular mutual funds, ETFs or individual stocks that we believe have the best return potentials in the current market from the universe of assets available in each given program and invests in them. When the HCM-BuyLine® indicates a bear market, HCM moves clients’ investments to less risky alternatives. Not every HCM-BuyLine® buy and sell will result in a profitable trade. There will be times when following the indicator results in a loss. However, there have been situations in the past in which HCM reduced clients’ exposure to equities during market downturns by following an HCM-BuyLine® signal, thereby preserving capital. Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Howard Capital Management), made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be equal to past performance level or that it will match or outperform any particular benchmark.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Howard.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. To the extent permitted by law, Howard Capital Management, Inc. does not accept any liability arising from the use of this communication. A copy of Howard’s current written disclosure statement discussing our advisory services and fees are available on our website http://www.howardcm.com. LASS.102820 HCM.102820.50