College and University costs are skyrocketing. People are getting crushed under the pressure of student loans. Georgia has provided a way for students to get a jump start on saving for the journey through higher education with The Path2College 529 Plan.
The Path2College 529 Plan, established in 2002, under the Georgia Student Finance Commission, is Georgia’s tax-advantaged college savings plan families can use to help pay for higher education expenses such as tuition, fees, certain room and board costs, books, supplies, equipment required for college enrollment, and K-12 tuition. Families can invest in a Path2College 529 Plan for as little as $25. Savings from the plan can be used at any accredited college in the United States and can also be used for students seeking a technical college certificate or diploma, four-year degree, or graduate degree. It’s available to any citizen or taxpayer. Grandparents other family members and friends can help contribute.
There are a variety of low-cost investment portfolios to choose from including age-based, multi-fund, single-fund and guaranteed options. Funds can be used at most accredited colleges and universities in the United States and certain colleges abroad. Up to $10,000 annually can be used toward K-12 school tuition per student from all 529 plans.
Earnings are free from federal tax, and many states offer a state income tax deduction or tax credit for contributions. Withdrawals are tax-free at both the federal and state level when used for qualified education expenses. State tax treatment of withdrawals for K-12 tuition expense is determined by the state where you file state income tax.
Path2College 529 Plan contributions are deductible for Georgia income tax purposes up to $4,000 per year, per beneficiary, for those filing a single return. Those limits double beginning January 1, 2020. Any earnings on those contributions in the Path2College 529 Plan are federal and Georgia income tax-deferred.
Withdrawals for qualified higher education expenses are federal and Georgia income tax-free. In addition, distributions from the Path2College 529 Plan for elementary and secondary school tuition are Georgia and federal income tax free up to a maximum of $10,000 a year per beneficiary.
The Path2College 529 Plan recently reached the $3 Billion savings milestone, and fees for families saving in the plan will be reduced. This reduction in fees is projected to save Path2College 529 Plan account owners approximately $300,000 annually.
As of March 31, 2019, the Path2College 529 Plan had more than 170,000 accounts and more than $890 million has been withdrawn to pay for education-related expenses. The Path2College 529 Plan was listed on Clark Howard’s Honor Roll, and it was rated in the “Top 10 Performing” by SavingforCollege.com. For more information visit: https://www.path2college529.com.
Source: Georgia Student Finance Commission