Image
Father reading daughter a book

Blog

Prepare for your child’s education with a socially responsible 529 plan that suits your needs

A college education can undoubtedly be one of the largest expenses in a person’s lifetime. With the average U.S. college tuition cost currently anywhere between $15,000- $40,000 per academic year, more and more students are graduating with crippling debt that can take years to pay off, damage their credit scores and prevent them from achieving financial security.

At Amalgamated, we believe in providing investment advice in the hopes of creating opportunities for all to thrive. Individuals with a college education are, on average, paid higher incomes and offered more opportunities in their careers than those with a high school diploma.1 When college tuition costs become unaffordable for middle- and low-income families, a vicious cycle is perpetuated that is difficult to break without equitable solutions. Amalgamated Investment Services offers access to options to help you prepare for the costs of your child’s education, possibly even with a sustainable investment portfolio.

One of the most popular ways to save for education today is through a 529 plan. 529 plans are tax-advantaged education savings vehicles governed by federal law but run by states through designated financial institutions who manage and administer specific plans. Much like the way 401(k) plans revolutionized the world of retirement savings a few decades ago, 529 plans have changed the world of education savings.

“I had been planning to open up a 529 savings plan for my daughter since I was pregnant with her,” said Sarah Miller, a community medicine clinician, and long-time Amalgamated customer and broker/dealer client through Amalgamated Investment Services. “Having a 529 plan makes me feel less worried about my daughter’s future. Ironically, I’m just about to pay off my own student loans now (in my mid-forties), and now I’m basically trading out those monthly payments to set aside money for my daughter’s education. I truly hope that by the time she’s older, education is more affordable, but until then, having this investment account for her makes me feel responsible as a parent and better prepared for her future.”

A 529 savings plan is an individual investment account, similar to a 401(k) plan, where you contribute money for college or K-12 tuition.529 savings plans offer a unique combination of features that no other education savings vehicle can match. For example, contributions to a 529 account accumulate tax deferred and earnings are tax free if the money is used for the beneficiary’s qualified education expenses. There may also be state tax advantages, as well.3

“My investment account was set up in a way that really works for my budget and current circumstances, so that I’m able to invest—a little bit at a time—for my daughter’s future, without negatively impacting my finances,” said Sarah.

A 529 savings account can be opened by anyone, regardless of income, and you do not necessarily need to be a parent to open an account. There are also plenty of 529 savings plan options to choose from, so you can shop around for the plan with the best money manager, performance record, and investment options to suit your needs. Moreover, under federal rules, you are entitled to transfer money in your account to a different 529 plan without income tax or penalties, so you can leave a plan that’s performing poorly and join a plan with a better track record or more investment options.

“I discovered there were no socially responsible 529 plan investment options sponsored by the state I was living in,” said Sarah. “I remember contacting state offices and asking for a socially responsible plan, and they had no idea what I was talking about. At Amalgamated, I reached out to my adviser and within one business day, he set up a call to walk me through my options to help me find a plan that met my needs that also adhered to my values."

Our advisers at Amalgamated Investment Services will do the heavy lifting for you to research and show you in detail what 529 plan options are available, the pros and cons of each plan, and can work with you to set up a sustainable investment strategy that helps you plan for the future of your children while supporting sustainable industries.

“I just could not believe a 529 plan, which is all about investing in the next generation and investing for our children’s future, would not be sustainable,” said Sarah. “It actually blows my mind that there is not a ready-made option among state-sponsored 529 savings plans that divests from organizations that are doing things that are detrimental to the environment. If ever there is a time that we should be socially responsible when investing, it should be in the plans for our children and our children’s future."

Aside from tuition costs, the books, supplies, and room and board for students on college campuses tend to be just as expensive as the tuition itself. The money that you save through a 529 savings plan can be used to pay for a wide array of education-related expenses beyond just tuition costs, including fees, room and board, and books and supplies.

Above all, our representatives will work with you to help you understand all the options available so that you can choose a plan most suited to your financial situation, as well as your goals and values. Amalgamated Investment Services is here to help you save and prepare as best as possible for your child’s future.

Reach out for more information on 529 plans.

 


Learn more and check the background of our firm and investment professionals at FINRA's BrokerCheck.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Amalgamated Investment Services is a trade name of Amalgamated Bank. Infinex and Amalgamated Bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

 

1 College grads earn $30,000 a year more than people with just a high school degree | CNN

2 529 savings plans don’t guarantee your investment return. You can lose some or all of the money you’ve contributed. And even though 529 prepaid tuition plans typically guarantee your investment return, plans may announce modifications to the benefits they’ll pay out due to projected actuarial deficits.

Please consult with your own personal tax advisor as we are not tax specialists.