Grow your kids’ opportunities this May with VT529

National 529 Day is May 29 (5-29, get it?), highlighting the advantages of 529 savings plans in helping families prepare for education after high school. In the Green Mountain State, we have a plan—called VT529—with added tax benefits to help your savings for college or training grow further.

What is a 529 plan?

These education savings plans are designed to help families set aside funds for future training costs, with tax advantages to help make saving easier. The plans are named after Section 529 of the Internal Revenue Code, which created these types of savings plans in 1996. Most 529 plans are operated by state agencies, like VSAC. The VT529 plan, or Vermont Higher Education Investment Plan, has more than 29,000 accounts worth over $600 million to help families pay for training and education after high school. The VT529 plan benefits prospective students of all ages, from babies to grad students and even adults returning to training.

What are the benefits of the VT529 plan?

As Vermont’s official 529 plan, the VT529 program offers a 10% annual VT state income tax credit to Vermont taxpayers on the first $2,500 contributed each year to the plan (or $5,000 for joint taxpayers). Legislative changes further enhanced the program, allowing funds to pay down existing student debt up to $10,000, along with tuition, housing and meals, books and computers, apprenticeships, and training in trades. Funds can be used at institutions throughout the U.S., as well as at schools in Canada and around the world. Your VT529 can be used for adult education or retraining, too.

VT529 funds can be used for:

✓ apprenticeships
✓ certificate programs
✓ technical education
✓ college & grad school
... and more

Many people don’t realize that 529 accounts can be used to pay for student food and housing costs—either on- or off-campus—computers, books and other educational equipment, and even to make student loan payments.

If your intended beneficiary decides not to use the savings, you can transfer the funds to a different beneficiary. You can also now rollover unused 529 funds to a Roth IRA. Learn more about all the flexible features of 529s.

Since the plan was started in 1999, more than 11,000 students have used VT529 savings to fund their training and education past high school. And that’s important because all Vermonters will need some form of education or training after high school to be qualified for Vermont’s future jobs. Research shows that students from families who save even a small amount (less than $500) for education are more likely to go on to college and to graduate from a program.

“College savings accounts are a powerful tool,” says Scott Giles, VSAC president and CEO. “Studies show that students with even small amounts of savings are three times more likely to pursue education after high school and four times more likely to complete that training, earning the degree or credentials they need for the jobs of the future.”

Giles adds, “We want to encourage parents to open a VT529 account and get started early to save for college and other career training. The ideal time to begin saving is between birth and age 5 to allow your investment to build over time.” But it’s never too late to start saving—even if your child is in high school, college or graduate school. May 29th is a reminder that now is the time to begin.

Peace of mind

The gift of education savings is also a gift of peace of mind to parents and guardians who feel responsible for helping their loved ones achieve their dreams. A survey recently performed by the College Savings Foundation found that nearly half (45%) of the 1,000 parents responding said they would like to ask for contributions to 529 education plans as gifts for their children for birthdays, graduations, holidays, or other major events. 

Start small. Dream big. 

What if you can’t save a lot right now? If, like many Vermonters, you’re focused on meeting today’s financial needs, you may feel that there’s little extra for saving. We understand that. 

But you may be surprised what a difference saving even small amounts can do over time. Saving just $25 a month to invest in your 529 can add up, helping you prepare for future goals. The results of that investment continue for a lifetime. Reports indicate that students who pursue higher training experience greater earnings, higher job satisfaction, and a healthier lifestyle than individuals without education past high school. Read more about the value of education.

Whatever the age of the kids in your life, now is the right time to save. To get started, you can open a new VT529 account for any beneficiary, fund an existing account, or purchase a Gift of College VT529 gift card. This gift card is available at Vermont Cumberland Farms and Kinney Drugs and is an easy way for friends and family to contribute to a VT529 account.

“Education is one of the most important investments one can make on behalf of a student, and Vermont’s VT529 savings plan is a great place to start,” notes Giles. “When families save for college or job training, they gain an edge on the future, which can be one of the greatest gifts of all.”

Find out more about VT529 and grow your kids’ future opportunities, one contribution at a time.