Broker Check

College Cost Bracket

Are you having fun watching the NCAA Men’s basketball tournament this year? At Baird, we are definitely enjoying the games! But as Financial Advisors and parents ourselves, we also can’t help thinking about the potential cost of college. That’s why I’m sending you this letter.

Many of our clients have already begun the process of saving for future college expenses, and have established a 529 account. 529 owners benefit from a number of excellent features: tax deferred growth, tax free withdrawals for qualifying educational expenses, enhanced owner control, and an Indiana state income tax credit of up to 20% of the amount contributed (up to a maximum of $1,000 per year).*

But are you investing enough to make college a reality? The enclosed chart lists the 64 schools who make up this season’s tournament bracket, and a projection of the total four-year tuition at each school beginning approximately eight years from now (assuming 6% annual inflation). Find your favorite school to see their projected cost.

At the very least, this is a fun way to address an important issue; feel free to pass the information – as well as our name and number – on to a friend or family member. If you like, we can use your current account balance and savings rate to estimate how much you will have accumulated when it’s time to start writing those checks! Then you will have a better ability to plan and adjust your investment schedule to meet your goals. Just call our office to get the process started.



*Baird does not give tax advice. Consult a tax or legal advisor regarding your specific circumstances.

Under the current law, qualified higher expenses include tuition, room, board (on and off campus), computer technology, books and supplies, apprenticeship programs. Due to the Tax Cuts and Jobs Act made distributions for K-12 tuition up to $10,000 per year come out federally tax free. The SECURE Act made distributions for apprenticeship programs and federal student loan debt up to $10,000 lifetime total federally tax free. Please check your state rules or consult with a tax advisor before taking a distribution for these expenses. Earnings on non-qualified distributions will be treated as ordinary income and taxable to the recipient’s tax bracket and a 10 percent federal penalty tax.

College savings plans offered by each state government vary significantly in features and benefits. The optimal plan for each investor depends on his or her individual investment objectives and circumstances. If your state, or your designated beneficiary’s state, offers a 529 plan, you may want to consider what, if any, potential state income tax or other benefits it offers, before investing. Investors should consider the investment objectives, risks, charges and expenses associated with a 529 Plan before investing. This and other information is available in a Plan’s official statement. The official statement should be read carefully before investing.

Investors should consider the investment objectives, risks, charges and expenses associated with a 529 Plan before investing. This and other information is available in a Plan’s official statement. The official statement should be read carefully before investing. Depending on your state of residence, there may be an in-state plan that provides tax and other benefits such as financial aid, scholarships and creditor protection that are not available through an out-of-state plan. Before investing in any state’s 529 plan, you should consult your tax advisor.

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