Promotions updated for 2020. 5/29 is “National 529 College Savings Plan Day” and certain state plans are offering promotions and/or giveaways. Some end on 5/29 and others end on 5/31, so that’s why I’m posting this early. Many are simply sweepstakes drawings which don’t really excite me, but here are some fixed bonuses:
- – $50 bonus when you open a new ScholarShare 529 College Savings Plan account with a $50 contribution and sign up for ongoing automatic contributions of $25 or more per month for a minimum of 6 months between 5/26/20 and 5/31/20. by Morningstar. No special state income tax considerations for contributions.
- – $50 bonus when you open a new MNSAVES account with a $50 contribution and sign up for ongoing automatic contributions of $25 or more per month for a minimum of 6 months between 5/26/20 and 5/31/20. by Morningstar.”For 2020, account owners, regardless of their relationship to a child, may be eligible to deduct up to $3,000 ($1,500 for single filers) from their Minnesota income tax. In lieu of the deduction, taxpayers may be eligible for a maximum state tax credit amount up to $500, subject to phase-out based on certain federal adjusted gross income thresholds.”
- – $50 bonus when you open a new account with a $50 contribution and sign up for ongoing automatic contributions of $25 or more per month for a minimum of 6 months between 5/26/20 and 5/31/20. Neutral rating from Morningstar. However, Oklahoma taxpayers may qualify for up to $20,000 in state tax deductions from contributions made to an OCSP account.
- – Up to $50 bonus. “Open a Florida 529 Savings Plan, from now through May 29, and we’ll seed your account with $25. Set up an automatic monthly contribution of $25 or more, and we’ll add another $25.” In addition, if enroll in a new Prepaid plan by May 31st, your $50 application fee will be automatically waived and no payments will be due until July 2020. As noted, this is a prepaid type of 529 plan for Florida residents.
- – $25 bonus. “Open an IDeal – Idaho College Savings Program account online between May 1-29, 2020. Make an initial contribution of $25 or more and we’ll add $25 to your account. To qualify for the $25 match, the beneficiary of the account MUST BE age 5 or younger. This special offer is limited to the first 200 accounts opened during this period.”
- – $100 bonus. “Open a new NEST 529 College Savings account using the promo code “$100bonus”, for a child 8 or under, deposit at least $100 and we’ll give your account a $100 bonus! This offer is only available through July 31, 2020 for the first 200 new accounts.”
Let me know if I’ve missed any.
My brief take on 529 college savings plans in general. I believe that you should worry about having adequate emergency and retirement savings first. Take care of yourself, so your kids won’t have to take care of you financially in old age. That’s a gift to them as well. However, if you are on track otherwise, a 529 plan can be a handy package of automated savings, automated investment, no annual tax paperwork, and valuable tax savings. For example, setting up an auto-deposit of $50 every month could add up to nearly $20,000 at the end of 18 years (assuming 6% return).
In terms of picking a specific plan, remember to first consider your state-specific tax benefits via the tools from , , or . Morningstar estimates that an upfront tax break of at least 5% can make it worth investing in your in-state plan even if it is not otherwise a top plan (assuming that is required to get the tax benefit).
If you don’t have anything compelling available, anyone can open a 529 plan from any state. You can open multiple 529 plans, and you can roll over your funds from one into another 529 plan once every rolling 12 months. (Watch out for tax-benefit recapture if you got a tax break initially.) Here are the most recent . I personally invest in the Utah My529 Plan for my children due to their DIY glide path feature and DFA fund access, but would also recommend the Vanguard Nevada 529 Plan if you want something that is more “set-and-forget”. There are many other solid plan options, but those are my standard replies for those looking for a specific recommendation.
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