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5/29 is College Savings Day

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Brenda EcheverriaMay 29 has been dubbed "529 College Savings Day" by many states in an effort to focus some attention on the college savings vehicles known as 529 plans. A 529 is a tax-advantaged savings plan offered by a state that makes it easier to save for college or other post-secondary education. Wisconsin’s plan is called Edvest.

In light of the upcoming attention being brought to this program, we thought you should know about a few changes for 2013:

Distributions now include technology expenses. A qualified distribution from a 529 plan now includes the cost of any computer technology, related peripheral equipment (such as a printer), and Internet access if they are required by the school or program the student is attending. They must be used by the beneficiary of the plan during the years he or she is enrolled at an eligible educational institution (generally a college, university, vocational school, or other postsecondary institution).

Increased gift tax exemptions. Your contributions to a 529 plan qualify for a $14,000 annual gift tax exclusion, up from $13,000 last year.

Dropping plan prices. There is a downward trend in management fees due to pressure from states and competitive bidding among plan management companies. Average total expense ratios are lower than just two years ago. Be sure you understand all fees and expenses associated with the plan as they vary from plan to plan. You aren't necessarily limited to your state's plan.

Contact your 529 plan administrator or financial advisor for any questions you may have.

The U.S. Securities and Exchange Commission has a nice overview of 529 plans, including questions to help you decide which plan may be best for you. Visit sec.gov for more information.

Brenda Echeverria, Financial Planner

This article is for informational purposes only and not intended to be legal or tax advice. Consult your tax advisor or attorney before taking any action.