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Why Save for My Grandchild’s Education?
While you’re busy spoiling your grandchildren, spoil them with the gift of a college education.
- Higher education leads to higher earnings . Over the course of a lifetime, the earnings difference between a high school diploma and a bachelor’s degree can add up to a million dollars.1 That’s over 60% as much as high school graduates.2
- By 2018, 67% of all jobs in Colorado will require post-secondary education.3
- 86% of all jobs in the current job market require at least a two-year degree.1
- They’ll gain information and skills that they'll use for the rest of their life, no matter what career they chose.4
- Getting an education past high school will affect your grandchild’s health, their wealth and their feelings of well being.5
- More than 3/4 of students wish they had more help in preparing for their financial future.6
- Help your grandchildren save for college through 529 college savings plans - Approximately a quarter to one-third of all grandparents help in this way!7
- College savings plans owned by a grandparent are not factored into the federal student aid eligibility of a dependent grandchild.8
Not only will a college education benefit your grandkids, it will also benefit you.
529’s have several tax advantages:
- Earnings grow free of both federal and state income tax, and qualified withdrawals are tax free.9
- Contributions made directly to a CollegeInvest college savings account are deductible from Colorado state income tax for Colorado residents. 10 Learn about the tax benefits.
- “Gifting away” assets to younger family members can also be a way to reduce exposure to the estate tax.
Estate Planning benefits:
- You can give up to $13,000 per beneficiary each year without incurring a gift tax or needing to report the gift on a tax return.
- Married couples can transfer a total of $26,000 per beneficiary.11
Get for more information on CollegeInvest 529 estate planning benefits.
2 U.S. Census Bureau's 2007 median earnings
3 http://cew.georgetown.edu/jobs2018/
8 www.finaid.org (This sheltering of grandparent-owned college savings plans applies only to federal student aid. Note: The student may have to report distributions from the account as income for the following year.)
9 The earnings portion of a non-qualified withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal penalty tax.
10 Contributions to the Plan(s) are deductible from Colorado State income tax in the tax year of the contribution , up to your Colorado taxable income for that year. Such deductions are subject to recapture in subsequent years in which non-qualified withdrawals are made.
11 Contributions between $13,000 and $65,000 made in one year can be prorated over a five-year period without incurring federal gift taxes or reducing your unified estate and gift tax credit. If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. If you contribute less than the $65,000 maximum, additional contributions can be made without incurring federal gift taxes, up to a prorated level of $13,000 per year. Federal gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given student in the year of contribution.
Important Considerations
To learn about CollegeInvest’s 529 program, its objectives, risks, charges, expenses, limitations, restrictions and qualifications regarding the Plans’ benefits and potential tax advantages, please read and consider carefully the Program Disclosure Statements (PDS) available at www.collegeinvest.org before investing. Also, check with your or your beneficiary’s home state to learn if it offers tax or other benefits for investing in its own plan. Administered and issued by CollegeInvest.
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