A Look at Mississippi’s 529 College Plan

What is a 529 plan, and how can it help bring your children closer to their educational goals? As a college savings vehicle, state managed 529 college plans are a relatively new option, and many parent have not yet taken advantage of what they can do for their children.

Here is some information on what you need to know about a 529 college savings plan, including what the state of Mississippi can offer your family in the way of 529 college savings plans.

What Are 529 College Savings Plans, Anyway?

The development of 529 college savings plans are relatively new, although most states now have some kind of 529 plan in place. A 529 college savings plan is essentially a special state managed college savings incentive program. The 529 plans were put in place to help parents save money for their college education. There are many things to take into consideration before you begin to invest in your state’s 529 college savings program.

When You Choose a 529 College Savings Plan . . .

Most importantly perhaps, you should keep in consideration the amount of time that your money will be invested in the 529 college savings plan. Other important factors to consider includes you family’s income tax bracket, the fees and charges that are loaded into the plan, the type of fees that are involved, the amount that you will be investing, and they types of income tax deductions that may be available to you if you open a 529 savings plan. Be on the look-out for fees. Even a small difference in fees can make a substantial difference.

Other Important Considerations

When you have decided that a 529 state savings plan is right for your family, you will find that there are still other considerations to be made. One of the most prominent features you will want to focus on is the state tax benefits that may accompany the 529 plan you are considering. Ask about the kind of special tax benefits that will be offered to you as a result of investing in a specific 529 plan. Will your state allow deductions of all or part of your earned interest?

The Mississippi 529 Plans – The MACS Option

The state of Mississippi offers two options that allow you to save for college. Families can choose to invest in either of these section 529 plans, or both of the plans if they so wish. Both of these plans were designed to help families save and plan for their children’s higher education opportunities and expenses. The first plan is known as the Mississippi Affordable College Savings Program, also known as MACS.

The MACS program lets families save for all qualified expenses. Under this section 529 savings plan, qualified expenses refer to tuition rates, fees, room and board expenses, and books. While you don’t have to be a resident of Mississippi to take advantage of the MACS program, Mississippi taxpayers can receive up to $10,000 in state tax deductions.

Your Second Option – The Mississippi Prepaid Affordable College Tuition Program (MPACT)

The MPACT program is described as a prepaid college tuition program. It allows families to pay full tuition along with mandatory fees at any public institution of higher learning in the state of Mississippi without having to worry about the rising costs of education.

In effect, parents can pay the current cost of tuition so that it will be paid off while their students reach college age. However, the MPACT program only covers tuition rates. It does not cover the expenses associated with room and board, books, transportation, or other college related costs.

Opening a 529 College Savings Plan for You a Possibility?

When you plan to have a family, you want everything to go according to plan. Having children is expensive, and many parents worry about how they will fund their child's college education. The answer for many people is to start saving as soon as their baby is born.

You can never save enough to ensure the future of your child saving for your child's future is especially important if you have several children, because the cost of college tuition is staggering.

One way to save for your child's education is called the 529 college savings plan. This college savings plan is relatively new in it makes it easy for people of all walks of life to plan ahead for their child's college education.

There are two different types of 529 college savings plans that you can choose from. What are the most popular 529 college savings plan, is the prepaid tuition plan. This allows you to save a monthly amount now, and lock in today's college tuition prices.

These credits that you purchase now will be used to pay for your child's tuition in the future. This is a smart and economical way to find your child's college education without the worry of the price of college in the future.

If you opt for this savings plan, you should remember that these 529 prepaid plans are good at state colleges and universities. Only a handful of private colleges and universities will take the 529 plan. This is something that you should consider before investing in a 529 college plan.

The other savings plan is quite different than the prepaid tuition plan that is still considered a 529 plan. These work more like mutual funds, they can help you invest a certain amount and watch it grow over time. There are many different types of these 529 plans.

So before you invest, you should research your options very carefully as he to an accountant or financial advisor that is knowledgeable in the field of college savings plans.

When considering whether or not, a 529 college savings plan is right for you and your child. There are several considerations to make first of all think about your current financial situation. If you are in the process of buying a new home or making other types of investments, it may be very difficult for you to think about saving a monthly amount for a college savings plan.

However, you should remember that this is a great way for you to get today's prices on tomorrow's education. College expenses will only rise in the near future and the longer you wait to lock in a prepaid tuition, the more expensive it will be.

The other thing that you should consider is your child's while it is impossible to know exactly where your child will want to attend college, you should think about that before you buy a 529 plan. 529 plans are perfect, if your child was to attend a public university or college.

However, only a handful of private schools will take this type of payment plan. While you can get your money back if your child chooses a private school in will be more difficult for you. In addition, you should also consider whether or not your child really want to go to college.

Are you interested in saving all that money now only to find out later that your child has no interest in attending college? This is a real possibility for many people. All is not lost however, if you invest in a 529 college savings and in your child chooses not to go to college. If you have another child, he or she can take that amount to attend college.

The bottom line is that a 529 savings plan may be right for you. However you should take the time to research all of your possibilities before investing in any college savings plan.

A Glimpse into the Independent 529 College Plan

Let’s take a glimpse into the independent 529-college plan. This is wonderful program designed to avoid the rampant inflation of college tuition. You actually lock in the current price of today’s tuition that your child can later use at any member college.

Here’s how the independent 529-college plan can work for your family. Say that you purchase half a year of tuition for your child today. The member colleges carry the risk and you are protected from future tuition increases. The tuition rate that you just paid is absolutely locked in no matter how much the tuition rises.

So you invest $10,000 this year for your daughter who will begin college in 15 years from now. As long as she attends a college that’s an independent 529 member, the plan will look up what the college was charging the year you made your deposit.

Say that it was $40,000; you have credit for 25% of one year’s tuition no matter what the school is charging in 2022. By prepaying, you’ve just saved $30,000 tax-free. You may be paying in excess of 50% less tuition than someone who is not participating in the independent 529-college plan.

The amount you save is in relationship to the amount you prepay, but even a small purchase can go a long ways towards saving on college. The independent 529 money covers only undergraduate tuition and mandatory fees. Nothing like the room, board, books or supplies like the other 529 plans do. This may or may not be changed by the time your child attends college.

Each member college offers a special tuition discount so you’re not only saving on tomorrow’s rates, but you’re actually getting a better deal than today’s prices. Each college sets their own discount rates. There are over 260 colleges participating in the independent 529 plan today. Take a look, some of the finest colleges and universities are among the participants.

Now say that your son or daughter is not accepted into any of the participating colleges. You still have options. You could roll your independent 529 plan over into a state sponsored 529 plan. You could change the beneficiary to another child.

Or you could get a refund and still take advantage of the tax breaks if you use the monies for other higher education expenses. Withdrawals used for items other than higher education will be taxed. If your child gets a scholarship to the school, the same options will apply.

The new schools that join the plan will honor the certificates from the current owners. And if a college ever terminates the plan, they will continue to honor the certificates that were sold during and before the time they were involved.

There are many positives to the independent 529 programs. You can enroll at anytime and add monies to your account at anytime. You can contribute as little as $25 a month as long as you reach a minimum of $500 in two years. There are no annual fees, entry fees or exit fees.

The member colleges pay for the annual management fee so all of your monies go to tuition. And best yet, all of it is federal tax-free. The rise in value between the original purchase and the amount of tuition the corticated is redeemed for is tax-free.

If you have high aspirations for a private college for your child, check the list of participating independent 529 plans. This is a great way to save on tuition. Check with your tax professional to take an ever better glimpse into the independent 529-college plan. This is a great way to get a big bargain on a college education for your child.

Tax Savings for 529 Plans even if College Has Started

College has already started and you may think that it’s too late to take advantage of tax savings for 529 plans. It looks like you’ve got a little rethinking to do. If you’ve been blessed with good geography, aka live in the right state, you could potentially save several hundred dollars (give or take) on your taxes.  

Here’s a summary of how this idea can work for you. Assuming you have another college savings plan, the money from there is taken and moved into the 529 plan of your state. When the next college tuition bill arrives, it will be paid with the money from the 529 plans. 

By doing this, you can claim a tax deduction from your state income tax. The expense of college has just become a write off on your state income tax return. And just like that, you’ve received a tax savings benefit from your 529.   

Not all states allow this 529 write off, so be sure to do your research. But the good news is that over fifty percent of the states and the District of Columbia will allow you to deduct all or part of your contributions. Rules do vary so be sure to check with your state or a tax professional for more details. 

For example, three states- Kansas, Maine and Pennsylvania, even allow residents to deduct their contributions to out of state plans as well. The tax savings could be several hundred dollars so it is very well worth the effort of doing your homework. Also, be aware that there are a few states that will require the funds to be held in the 529 plans for a minimum time period. 

It is important to choose the right administrator for your plan. By making such an immediate payment to the college, the transaction costs in creating the account will probably be greater than the amount of money that the account will generate. So not all plan providers love this sort of quick transaction. But a good administrator will help you find all the tax benefits.

The state tax department loses revenue with transactions like this so who can tell what sort of changes in policy could be made. The rules governing those write-offs may be changing soon.

And many of the plan managers could change over the next few years, since some 60% of state contracts with their current 529 providers are set to expire by 2010.  This is why it is so very important to check with your accountant or tax professional regarding the 529 plan rules in your state. 

Parents, grandparents, other family members, friends or anyone can establish a 529 plan.  You can even establish one for yourself. Since there are no age restrictions, it’s never too late to open a 529 plan (named after its section in the IRS code). Funds are generally available for immediate use.  And it’s easy to withdraw money from your fund. 

 By filling out certain forms, you can even arrange for the money to be sent directly to the college. Take advantage of the tax opportunity while you still can. It’s only too late once you graduate because unfortunately, student loan payments don’t count.  Of course, there’s always graduate school.

A few hundred dollars here and there can really add up especially during the college years.  So what if college has started?   Look for those state tax breaks with a 529 plan.  Take advantage of the tax savings for 529 plans right now even though college has started and put a little extra green in your pocket.