A Personal Perspective from Somerset’s Nick Netherton
Ever met the mom or dad who says, “Man, raising kids is so expensive and so exhausting?” I think we all can agree the time, effort and money of raising children can be overwhelming if you stop and think about it. I’m a new dad myself, and I’m here to tell you, I had no idea how much my life was about to change when my son Luke came into the world. Suddenly my life was no longer about me and what I wanted to do in my free time. Should I go for a jog? Watch a movie? Go fishing in my kayak? No, no, no, my life now consisted of changing diapers and entertaining a very active seven month old boy who constantly loves to explore new things.
It’s totally worth it, though. It’s so cool to watch your child grow and learn new things each day. Plus, how can you not love seeing that big grin on their face when you walk in from work. It totally makes it all worth it.
Being that I’m a financial analyst in the professional world and a man who likes to plan his finances into perpetuity (according to my wife, Mandy), my mind started racing on how to save and pay for Luke’s college the day I learned Mandy was pregnant. Heck, if I had it my way, I would have opened up a college savings account the day Luke was conceived! I kid of course.
In all seriousness though, I wanted to do my homework on how to wisely invest and maximize my return for Luke’s college expenses. I didn’t want to just invest in the first thing that looked good. With that said, after many hours of researching the best college savings vehicles available, I present to you three reasons why an Indiana 529 is my favorite college savings plan.
- Indiana offers a 20% tax credit to Indiana residents up to $1,000.The good ol’ state of Indiana offers an incredible tax advantage (so incredible in fact, it’s the best 529 tax credit available in the entire U.S.) to those who choose to invest in their child’s education. So much so that Indiana offers a 20% (that’s TWENTY PERCENT) tax credit, up to $1,000, in an Indiana 529. Hey I don’t know about you, but I like free money. Invest $1,000? Boom, here’s $200 from the great state of Indiana. Invest $5,000? Boom, here’s $1,000. Not only do you get a 20% immediate return on your investment (which beats the stock market’s historical average return) your investment grows dependent on which mutual fund you choose to invest in (current investment returns are anywhere from 3.48% to 10.42%, depending on how conservative/aggressive you prefer).
- Money from an Indiana 529 can be used for tuition, fees, books, supplies and equipment required for study at any accredited college, university or vocational school in the United States and at some foreign universities.A popular myth by many who aren’t familiar with an Indiana 529 is that because the Indiana 529 is a state sponsored plan, the funds are limited to only universities or colleges in the state of Indiana. Another myth is that the funds can only be used for tuition fees. Both are false. Your child can attend any accredited university from the University of Hawaii to the University of Maine. Not only that, but expensive items such as books and computers are covered as well.
- Unused funds from an Indiana 529 are transferable to another family member without penalty.Funds in an Indiana 529 are transferable to any beneficiary’s family member including their spouse, child, sibling, parents, stepparents, cousin, aunt/uncle or niece/nephew. That means those funds are fully transferable with no penalties or income tax applied. So even if your child doesn’t attend college, you can gift it to another family member. You can also withdraw the funds, however, you will be required to pay income tax on any gains earned, plus a 10% penalty on the entire amount.
For more information on the Indiana 529 plan, please visit: https://www.collegechoicedirect.com/
