This is a Sponsored Post from MNSAVES.
The holiday season is upon us – a time for festive gatherings, sparkling lights, and the search for the perfect gift. If you’re looking for a unique and lasting gift this season, consider the gift of college savings. While toys, tech, and gift cards can be fun too, an investment in education can open doors to endless opportunities and a brighter future for your child or grandchild.
Giving the gift of education is easier than you think, thanks to MNSAVES, Minnesota’s 529 college savings program. Anyone can open an account with as little as $25 and in about 15 minutes. Once an account is established, anyone can contribute, including parents, grandparents, relatives, and friends.
If saving for college is on your gift list this year, here are some important things to know.
What is a 529 plan?
A 529 plan is a tax-advantaged investment account designed to help families save for future education expenses. Think of it as a Roth IRA, but instead of saving for retirement, you’re saving for future college costs. MNSAVES is specifically designed to help people save, invest, and pay for future education.
Can family and friends contribute to an account?
Yes, you don’t have to go it alone! Recent studies have shown that people are increasingly willing to spend money on something as important as college, rather than on another toy that is forgotten after the holiday season. According to SavingforCollege.com, one-third of parents surveyed indicated that they ask family and friends to contribute to their child’s college savings fund in lieu of toys and other gifts.1
MNSAVES makes it easy for family and friends to make gift contributions to a child’s 529 account for holidays, birthdays, or accomplishments such as good grades or graduation. The account owner shares a unique Ugfit® code, allowing grandparents or others to contribute directly to the MNSAVES account at Ugift529.com.
If the person making that gift is a Minnesota taxpayer, their contributions can be tax-deductible because the Minnesota state income tax deduction for contributions made to an MNSAVES plan is available to any Minnesota taxpayer, not just the 529 plan account owner. So, open an account and encourage family and friends to contribute this holiday season.
What are all the tax advantages with MNSAVES?
If you are planning to save for education, why not choose an account that offers you triple tax benefits:
1. Your contributions grow tax-deferred over the years you are saving.
2. Withdrawals are 100% tax-free when used for qualified expenses.
3. The plan offers an MN state tax deduction on contributions up to $3,000 per year for joint filers and $1,500 for single filers.
Where can MNSAVES be used?
It’s a common misconception that MNSAVES funds can only be used for schools in Minnesota. In fact, the funds can be used at in-state and out-of-state schools across the country, as well as some schools abroad. Funds can be applied to a traditional four-year degree, a technical degree, a trade program, or a registered apprenticeship.
What does MNSAVES cover?
In addition to tuition and fees, MNSAVES funds can be used for housing and food, books, computers, and more. Further, recent legislation further expands how 529 funds can be used, and now includes expenses associated with obtaining and maintaining a postsecondary credential (e.g., an occupational or professional license). This helps cover the cost of tuition, books, supplies, and equipment needed to maintain a certification or license (e.g., electricians, health care workers, skilled trades, etc.) 2. Also, MNSAVES can be used for certain qualified K-12 expenses up to $20K, beyond just tuition. Now, due to recent legislation, families can also use 529 funds for curriculum materials, books, instructional or online educational materials, tutoring or educational classes outside the home, fees for specific standardized tests, dual enrollment costs, and certain educational therapies for students with disabilities. This expansion opens the door for more students to benefit from early investment in their education.
How do I get started with MNSAVES?
It takes about 15 minutes to open an account, and you can start with as little as $25. Many people set up recurring contributions or a payroll deduction to stay on track with their college savings goals. Go to mnsaves.org and click the green button in the top-right corner of the homepage. Follow the prompts to open an account online or call 877-338-4646 to talk with a customer service representative.
Celebrate the season of giving by investing in a gift that can last a lifetime—the gift of education. Happy holidays from your friends at MNSAVES, and thanks for creating brighter futures.
1 Martha Kortiak Mert, “Survey Finds Parents Prefer College Savings Gift but Hesitate to Ask,” SavingforCollege.com, November 11, 2024, https://tinyurl.com/9v82em67
2 Withdrawals for recognized postsecondary credentialing—including tuition, books, equipment, supplies, as well as testing fees for continuing education and therapies for students with disabilities—are exempt from federal income tax. For Minnesota taxpayers, these withdrawals are subject to recapture of Minnesota state income tax on the earnings and Minnesota’s recapture provisions for previously deducted or credited contribution amounts. Consult a tax professional for guidance.
3 Withdrawals for qualified K-12 (primary or secondary) expenses such as tuition, books, testing fees, tutoring and educational therapies for students with disabilities can be withdrawn free from federal income tax. For Minnesota taxpayers, these withdrawals are subject to Minnesota state income tax on the earnings and Minnesota’s recapture provisions for previously deducted or credited contribution amounts. You should talk to a qualified professional about how tax provisions affect your circumstances.
To learn more about the Minnesota College Savings Plan, its investment objectives, risks, charges, and expenses, see the Plan Description at mnsaves.org before investing. Please read it carefully. Investments in the Plan are neither insured nor guaranteed, and there is the risk of investment loss. Minnesota taxpayers can reduce their state taxable income up to $3,000 if married filing jointly ($1,500 filing single) for contributions made into a Minnesota College Savings Plan, or may be eligible for a maximum credit amount up to $500, subject to phase-out based on certain federal adjusted gross income thresholds. If the funds aren’t used for qualified higher education expenses, a federal 10% penalty tax on earnings (as well as federal and state income taxes) may apply. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributor for the Minnesota College Savings Plan. 4995635
