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Facts About Delaware's 529 Plan

By    |   Wednesday, 20 May 2015 11:49 AM

Those considering saving for a higher education for themselves or their children might want to look into a 529 tax-advantaged plan such as Delaware's College Investment Plan. According to the United States Securities and Exchange Commission, the 529 tax-advantaged savings plans are authorized by the IRS to encourage people to save for future college costs.

These plans, legally known as "qualified tuition plans," are sponsored by states, state agencies or educational institutions and differ from one state to the next on what they offer and entail.

Generally, there are two major types of 529 plans in the form of pre-paid tuition plans and college savings plans. Each of the 50 states and the District of Columbia sponsors at least one type of college plan. Some private colleges and universities also sponsor a pre-paid tuition plan.

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Delaware's plan is a Fidelity-managed 529 plan that looks a lot like plans offered in Arizona, Massachusetts and New Hampshire, according to Savingforcollege.com. It has several options worth examining. Here are10 facts about Delaware's 529 plans.
  1. The Delaware College Investment Plan has three sets of age-based and two static investment options. The age-based portfolios let contributors invest in actively managed Fidelity mutual funds that are a combination of Fidelity and third-party funds. A third option invests contributions into Fidelity index funds.

  2. A bank savings option also is available.
  3. There are no state residency requirements to open a fund, but those who do must be United States citizens or resident aliens and at least 18 years old.

  4. Maximum contributions are capped at $350,000, with minimum lump-sum contributions of $50 per beneficiary, with minimum subsequent contributions of $25. A minimum contribution of $15 is possible with automatic investment – or $45 per quarter.

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  6. Age-based investment is one option of this plan, and that has three choices. One is invested in Fidelity mutual funds, another in Fidelity index mutual funds and a third multi-firm option with investment funds offered by several companies. The beneficiary age determines which portfolio type is used, and those portfolios will shift to a more conservative investment allocation as the beneficiary gets closer to college age.

  7. Static investment options can be chosen from six multi-fund portfolios, five individual fund portfolios and a bank deposit portfolio.

  8. According to the Delaware Department of Education website, the state 529 plan allows beneficiaries to use the money for education at any qualified higher learning facility nationwide, whether that be a two- or four-year college, a tech school, or one of many international institutions.

  9. Delaware taxpayers can have their tax refund checks directly deposited to their 529 plans.

  10. Delaware offers no matching funds for those who enroll in their 529 plans.

  11. Contributions to a 529 plan are exempt from federal taxation, and Delaware follows federal tax-free treatment for rollovers.

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Those considering saving for a higher education for themselves or their children might want to look into a 529 tax-advantaged plan such as Delaware's College Investment Plan.
529 plan, Delaware, facts
Wednesday, 20 May 2015 11:49 AM
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