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Facts About Illinois' 529 Plans

By    |   Wednesday, 20 May 2015 10:55 AM

Illinois offers four ways to prepay for college through 529 plans, two are consumer plans and two are advisor-sold plans. Saving for college can be a daunting task in today's economy with the escalating costs of higher education, but Illinois programs are designed to help.

The 529 tax-advantaged savings plans authorized by the IRS are legally known as "qualified tuition plans," and are sponsored by states, state agencies or educational institutions. They may differ between states on what they offer and entail.

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Here are some facts about Illinois 529 plans to consider:

1. The two consumer plans are the Bright Start College Savings Program and the College Illinois! Prepaid Tuition Program. The Bright Start savings plan is managed by Oppenheimer Funds Inc., Vanguard and American Century. It receives the highest rating of all four plans offered by the state. No state residency is required, but United States citizenship is. Contributions for each beneficiary max out at $350,000. Minimum contribution is $25 with subsequent contributions set at $15.

2. The Bright Start College Savings Program offers age-based investment options with six portfolios and static investment options with five blended portfolios and three index portfolios to choose from.

3. There is no enrollment fee, but Oppenheimer-managed portfolios charge $10 annually per portfolio for the Vanguard options. Other fees apply as well. There are no matching state dollars, but Illinois 529 plans with up to $10,000 annual individual or $20,000 joint contributions are state tax deductible, according to Savingforcollege.com.

4. A College Illinois! 529 Prepaid Tuition Plan will freeze college costs by allowing families living in the state to prepay tuition at current contract prices. The plan covers 100 percent of in-state or in-district tuition and mandatory fees at different types of Illinois higher education institutions.

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5. College Illinois! allows you to purchase up to nine semesters, depending on which of the three-tiered plans is bought. Account owners must be residents of Illinois and needed to buy this year's plan by April 30 to lock in current rates.

6. Illinois offers two advisor-sold 529 plans; the Bright Directions College Savings Program and the Bright Start College Savings Program. Bright Directions is sold through brokers and fee-based financial advisors. It has a large multi-manager platform that offers several age-based, static multi-fund and individual fund options.

7. Initiated in 2005, the Bright Start College Savings Program plan is managed by Union Bank and Trust Co. of Lincoln, Nebraska
. It has no state residency requirements and individuals, custodians and certain legal entities are allowed to participate. The account balance is capped at $350,000 with no minimum contribution level set. There is a $10 enrollment fee and a $3 quarterly maintenance fee.

Like the last program, the Bright Start College Savings Program is advisor-sold. It has a variety of investment options at lower cost than similar 529 advisor-sold programs and is open to Illinois residents and non-residents alike. It sets a minimum contribution level at $25.

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Illinois offers four ways to prepay for college through 529 plans, two are consumer plans and two are advisor-sold plans. Saving for college can be a daunting task in today's economy with the escalating costs of higher education, but Illinois programs are designed to help.
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2015-55-20
Wednesday, 20 May 2015 10:55 AM
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