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.

Top FAQ’s Regarding the 529 Plans

There are many questions that need to be asked about any type of savings plans for college tuition, but the 529 plan has more than most. This is because the 529-college savings plan is widely available, and because it varies from state to state. This creates a need for even more answers than most other college investment tools. Many top questions seem to appear more often than others are, and they are as follows:

Are there any tax benefits to using the 529-college savings plan? The answer to this question is yes, there are many tax benefits. If you live in a state where there is state income tax, it does not apply as income for tax purposes. This is also true for federal taxes no matter where you live. This means that you can potentially bring home the same amount of money every week or month while still investing in this account. 

What happens if I file bankruptcy? This is another key question, particularly for people who think this may happen in the future. Fortunately, these funds receive protection from creditors, even if you need to file bankruptcy, which is another appealing quality of the plan.

What happens if my child decides not to go to college? This is one of the foremost-asked questions, because everyone wants to know that they will not lose their money in this case. The funds for a 529 plan can switch to other beneficiaries at any time, so you can transfer the funds to your other child or even close relatives.

There are limitations to who the beneficiary can be, but they are not extremely limited, allowing you many options. In the case that there is no one to transfer the funds to, you can still have access to the money, but there are typically penalties that vary from state to state.

How does it work? This is the main question, and has a variety of answers, particularly because each state is different. Typically, however, you get to choose from two options. One of these options is to purchase college hours in advance; saving you the increase in costs that will have raised by the time your child actually goes to college. The other option is investment allocations, set up by you with limitations.

Will this type of account limit where my child can attend college? Since the plans are state-run, there is often the misconception that this money will only be good for colleges within state borders. However, this is not true. There are over 8,000 colleges spread out all over the United States that will allow use of these funds, and this keeps the limitations low on where your child can attend school.

Will having this money saved affect my child’s ability to qualify for financial aid? This is another of the top FAQ’s about 529 savings plans, and the answer to this is no. Similar to the way the funds do not count as income for tax purposes, they do not apply when applying for financial aid, either. This allows your child to use the funds you have saved, as well as use additional moneys loaned by the school or state.

These are just the most commonly asked questions, and there are many others, as well. Fortunately, each state will answer questions about their individual program, so you can be sure that this is the best plan for you before beginning the investment. Knowing which plan will offer you and your child the most benefits in advance can help you start saving in the right way from the very beginning.

Best States in Which to Fund your 529 Plan

What is a 529 plan, and how can it help your child achieve the best educational opportunities? Here is the skinny on what you need to know about a 529 college savings plan, including the best states in which to fund your 529 college savings plans.

What is a 529 College Savings Plan?

A 529 college savings plan is a special state-based college savings incentives program that helps you save money for your child’s college education. Not all states have a 529 college savings program that off the same kinds of benefits. Here are some things you should consider when you are choosing a 529 college savings plan.

Things to Consider When Choosing a 529 College Savings Plan

There are many important factors to consider when you are choosing a 529 college savings plan. First, you should consider the amount of time that your money will be invested.

You should consider your family’s tax bracket, how many (if any) fees and sale charges are associated with the plan, what kind of fees are involved, how much you will be investing, and what kind of state income tax deductions are allowed when you contribute. Pay close attention especially to fees. Even the slightest difference in percentage points will eventually add up.

Consider the State Tax Benefits

When choosing your 529 college savings plan, take into consideration your own state tax benefits. What kind of special tax benefits, if any, does your states 529 plan offer you? Does your state let you deduct all or part of your contribution on your state income tax form? This is something to consider.

What Kind of Costs are Associated with the Plan?

There are some plans that come loaded with high fees that will inevitably begin to eat into your returns. However, there are other plans with lower costs. Some analysts point to the plans managed by Vanguard and TIAA-CREF as those that have lower fees and costs.

Make sure you know exactly how much you will be paying in fees, including administrative costs, fund loads, management fees, and sales’ charges, both front-end and back-end. Ask for a list of all possible costs associated with the plan.

Consider the Different Investment Options

What kind of investment options are you looking for? Most state 529 plans offer different types of investment options. Decide what kind of investment style and performance you are comfortable with before you invest.

Who Has the Best 529 College Savings Plan?

Most analysts agree that it is a good idea to compare closely your own state’s 529 plans with the plans of at least two other states. Here are some things you should definitely consider when you are comparing different 529 college savings plans. First, consider what kind of state tax incentives will be available to you.

Does one state’s 529 plan offer tax-free withdrawals or special deductions? Is the plan generally affordable for you? What kind of investment performance has the plan shown in the past? Is the plan flexible enough for your needs? Does the plan offer low costs? These are all things to consider when you are finding the 529 state college savings plans that work best for your family.

Ranking the Best 529 College Savings Plans

Many analysts have ranked the best 529 college savings plans. In general, most analysts agree that the following states have some of the most desirable feature: Pennsylvania, Texas, South Dakota, Iowa, Virginia, Arkansas, Maryland, New Jersey, Nebraska, Florida, Utah, Hawaii, Illinois, and Louisiana.

Most analysts agree that most TIAA-CREF plans offer all-around desirable features. States with TIAA-CREF managed plans include New York, Idaho, Kentucky, Tennessee, California, Vermont, Georgia, Michigan, Connecticut, and Michigan.