Iowa offers two ways to save for college through 529 plans, one is a consumer plan and the other is an advisor-sold plan. Saving for college can be a daunting task in today's economy with the escalating costs of higher education, but these 529 programs are designed to help.
The 529 tax-advantaged savings plans are authorized by the IRS and legally known as "qualified tuition plans." They are sponsored by states, state agencies or educational institutions and may differ from one state to the next on what they offer and entail.
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Here are some facts about Iowa 529 plans to consider:
1. There are no state residency requirements, but account holders do have to be United States citizens or resident aliens and at least 18 years of age. UGMA/UTMA Custodians also are eligible. The College Savings Iowa Vanguard-managed 529 plan offers a choice of four different tracks in its age-based option. It also has 10 static portfolios. All accounts can be linked to the Upromise reward service.
2. The Upromise service helps save money for college by taking a percentage of eligible spending at companies and sending a portion of those earnings directly to College Savings Iowa 529 accounts.
3. The maximum contribution cap for this plan is $320,000. Minimum contributions are set at $25, but can be lowered to $15 with per pay-period deductions. The age-based investment option offers four risk levels, while the static investment option includes six multi-fund portfolios and four individual fund portfolios.
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4. There are no program-matched funds from the state, but the state does allow up to $3,163 per beneficiary non-taxable contributions for an individual and up to $6,326 for a couple for 2015 income tax purposes.
5. The IAdvisor 529 Plan is an advisor-sold plan managed by Voya Investment Management Co. It offers an age-based option, five static allocation options and a dozen singe-fund options that utilize mutual funds. This is a new plan that has not yet been rated at Savingforcollege.com, a web site that offers advice and facts about each state's 529 plans. There is no state residency requirement for this plan.
6. Cap contributions are set at $320,000. The minimum start-up contribution is $250 per investment option and $50 per month per option with an automatic investment plan or $25 per pay period with automatic payroll direct deposit,
according to Savingforcollege.com. There are no matching dollars from the state, but there are Iowa state tax deductions that increase yearly with inflation – but only contributions made by the account holder are deductible.
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