5 Financial Tips for College Planning

Do you have $138,000 for your child’s college education?

The average cost of attending a University in California for one year is $34,500. And it’s only getting more expensive.*

But college planning is tricky. If done incorrectly, the amount of financial aid a student could receive could be negatively impacted. Luckily, Congress has helped by creating the 529 college savings plan.

There are five significant benefits to a 529 college savings plan:

  1. Accelerated Gifting
    A donor may gift up to 5 years of annual gift exclusion ($14,000 per year, $28,000 for couples) in a single year.
  2. The 529 Account Owner maintains Control Over the Property
    Even though the gift is made, the owner of the 529 has the freedom to decide to change the beneficiary or to recall the gift.
  3. 529 Assets are Excluded from the Donors or Owners Estate
    Although the owner retains control, the assets are excluded from the donors or owners taxable estate.
  4. Favorable Tax Treatments
    The assets accumulate tax deferred and if used for higher education the assets can be withdrawn free of federal taxes.
  5. Financial Aid Implications
    Because 529 assets are not treated as students assets, (when the 529 plan is owned by a grandparent) they therefore do not impact financial aid benefits.


There are other considerations when deciding to fund a 529 plan. Clients should take into account any potential expenses, sales charges and/or penalties for selling or buying investments.

If you are wondering if a 529 plan is right for you, or have any other questions, feel free to give us a call at 415-898-4439 or email us at info@valleyoakwm.com.


*Source – University of California

Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Tax treatment of withdrawals at the state level may vary. Please consult with your tax advisor before investing.