Many parents and families today worry their child or grandchild will begin their adult lives with burdensome school loan debt. One of the best strategies to alleviate some, or all, of that burden is by saving ahead of time with a Minnesota 529 College Savings Plan. Because, when it comes to paying for college, it’s better to save now than borrow later.
What is MNSAVES?
MNSAVES is a state-sponsored tax-advantaged 529 college savings plan that helps families and individuals plan and prepare for the cost of education.
The plan’s investment options vary in risk from conservative to aggressive. There is also an option which automatically adjusts the risk level based on when the student is anticipated to begin their postsecondary education.
As a 529 Plan, MNSAVES also offers certain gift and estate tax planning benefits, and withdrawals are tax-free at both the federal and state level when used for qualified education expenses. Additionally, any earnings grow free from federal tax.
Funds can be used for any education-related expenses at any accredited university, college or vocational school nationwide — and many abroad. In addition, up to $10,000 annually per student, in aggregate from all 529 plans, can be withdrawn free from federal tax if used toward K-12 school tuition.
Opening an account
A MNSAVES account can be opened in 15 minutes with as little as $25 per investment option, or $15 dollars per pay period using automatic payroll direct deposit. It’s available to any citizen or tax-payer. And, just about anyone can help contribute including grandparents, or other family members and friends.
There are no application fees, no cancellation fees, no change in beneficiary fees -only program management and underlying mutual fund fees. You don’t pay these program management fees directly out of your pocket. Instead, they are factored out of your portfolio option and your account bears its share.
Finally, if it turns out your child or grandchild doesn’t need all the money or their education goals change, you can designate a new beneficiary penalty-free so long as they’re an eligible member of your family.