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Facts About Washington's 529 Plan

By    |   Wednesday, 20 May 2015 02:28 PM

As the costs of a college education continue to rise, families look for ways to give their children the benefit of higher education without going into debt. One way to meet this need is by investing in a 529 plan, described by CollegeSavings.org as a "tax-advantaged investment plan designed to encourage saving for future higher education expenses of a designated beneficiary."

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There are 529 savings plans and prepaid tuition plans. With a savings plan, investments are tied to market performance, and owners benefit additionally from federal and sometimes state income tax advantages.

With a prepaid tuition plan, college tuition is purchased at current prices, and later will pay out at the future tuition price when the beneficiary goes to college. Prepaid tuition plan performance is linked with tuition inflation instead of the market.

While many states offer the 529 college savings plans, Washington does not. Washington's plan to help families prepare for the cost of college is a prepaid tuition 529 plan called the Guaranteed Education Tuition. With the Guaranteed Education Tuition program, Washington residents may purchase units of tuition.

According to SavingForCollege.com, each unit "is redeemable for one percent of the resident undergraduate tuition at the highest-priced public university in Washington, and may be used for any eligible educational institution in the country."

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The current minimum contribution for this account through May 2015 is one unit at $172. The maximum contribution is 500 units at $86,000, which can be paid in installments.

There is a two-year waiting period before funds may be redeemed or refunded after the initial purchase. Exceptions are made in the event of the beneficiary's disability or death, financial difficulty, early cancellation in the first six months, or for accounts totaling less than $500.

The first distribution of funds from the Guaranteed Education Tuition 529 plan must be made within 10 years of the beneficiary's college enrollment date as projected at the opening of the account. After the initial distribution, the funds are available for another 10 years.

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Enrollment in this plan is open all year for children 12 months of age and younger, while others may enroll between Nov. 1 and May 31.

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As the costs of a college education continue to rise, families look for ways to give their children the benefit of higher education without going into debt.
529 plan, facts, washington
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2015-28-20
Wednesday, 20 May 2015 02:28 PM
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