Idaho’s 529 Education Savings Plan Benefits Students and Savers

In my 20 years as a certified financial planner, I was always looking for ways to help my clients reach their goals. College savings for children or grandchildren was almost always on the list. Initially, there weren’t many options. But when Congress authorized 529 college savings programs, I found a great way for my clients to save for education.

I not only started recommending 529 plans with my clients, but when our first grandchild was born in 2003, my wife and I sat down and did what I always say people should do – we put some money away for him each month. We put $50 a month in a 529 account for him, and when he graduated from high school, he had a nice nest egg built up for college. We now have five grandchildren and for each one, as soon as they were born, we set up a 529 with a $50 a month contribution. This has allowed us to give our five grandchildren financial resources to use for education after high school.

You don’t have to be an expert in investing to save with an Idaho 529. You decide your risk level and choose the investment option that works best for you. You can manage your own investments, but as a financial advisor, I liked the option to invest based on when my grandchildren will need the funds. The “set it and forget it” option lets you contribute automatically, and you don’t have to worry about changes in the market. Over time, the ups and downs balance out, and the adjustments are automatic based on how close your beneficiary gets to needing the funds. My oldest grandson’s account is now in a very conservative portfolio because he has graduated from high school, and we didn’t have to do anything. His account has grown considerably over 20 years, and the earnings aren’t taxable if the funds are used for education.

In addition to tax-deferred earnings, Idaho residents can deduct their contributions to an Idaho 529 from their taxable income on their state taxes. Initially my three oldest grandchildren’s 529 savings weren’t in Idaho’s 529, but my wife and I moved it all to the Idaho plan to qualify for the state tax deduction. While the tax savings is a helpful benefit, the most important thing is planning ahead to take some of the sting out of the cost of higher education.

The IDeal Idaho 529 program offers great flexibility as well. We don’t have to worry about what will happen if one of our grandchildren decides not to go to college. We can transfer the money to another grandchild or even to one of their parents if they want to go back to school.

There is also flexibility in how to use 529 funds. Not every student is going to go to a four-year college, but some kind of education after high school is important. An Idaho 529 can be used for K-12 tuition, for eligible colleges and universities both in and out of Idaho, for trade schools and for registered apprenticeships. Recently, Congress expanded the program to allow for student loan repayment, and starting next year, unused 529 funds can be rolled over to a Roth IRA for the 529’s beneficiary.

As a member of the Idaho Legislature and having been on the House Education Committee, I have always been willing to say I have personal experience with IDeal, and it’s a great program. The Idaho 529 program is low cost and it’s simple to use. And, as grandparents, my wife and I are grateful for a meaningful way to share with the next generation.