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Facts about Nebraska's 529 Plans

By    |   Thursday, 21 May 2015 06:20 PM

Residents in Nebraska making plans to save money for college may want to explore the state's 529 plans.

The plans, named after the IRS Tax Code 26 U.S.C. § 529 that allows people to invest for educational purposes in plans where the income is not taxable at the federal level. In Nebraska and other states, residents also often receive tax incentives for their dollars saved. 

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Here are seven facts and even a video from Nebraska officials about the 529 plans available from the state:

1. The program was launched in 2013, under the name, “Nebraska Educational Savings Trust,” otherwise known as the NEST Direct Plan.

2. Contributions to Nebraska's 529 plans of up to $5,000 as an individual or $10,000 for a couple filing jointly can be deducted from the Nebraska state income tax, the NEST 529 website said.

3. Residents from other states can invest
in the NEST Direct Plan, but they will not receive a tax break on their own state’s income tax, according to the Internal Revenue Service.

4. Morningstar reported
that Nebraska recognizes two additional 529 plans beyond the NEST 529 managed through the state. The first is the TD Ameritrade 529 College Savings Plan and the other is the State Farm College Savings Plan.

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5. Contributors can provide as much as $14,000
individually or $28,000 when filing together in a single year and not be subject to a gift tax, so long as no other gifts are made for five years, the NEST website said. If the account owner passes away before the five-year period is over, a pro-rated portion of the amount gifted will be included in their estate for tax purposes.

6. Anyone can make a gift to a beneficiary's 529 plan
using the Ugift feature. This allows people to donate using online gift certificates that go toward the beneficiary’s balance, the NEST site said. There are several theme based options available, including birthdays, the birth of a new baby, and a young child’s graduation from grades K-12.

7. The TD Ameritrade 529 College Savings Plan
for Nebraska offers four age-based portfolios that are aimed at investing based upon the number of years until the beneficiary is expected to need the funds, SavingforCollege.com reported. The strategy for investing the funds will be based on four different risk levels, based on the assumption that the sooner the funds will be needed, the more conservative the investing strategy needs to be.

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Residents in Nebraska making plans to save money for college may want to explore the state's 529 plans.
Nebraska, 529 plan, education, savings
Thursday, 21 May 2015 06:20 PM
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