529 College Savings Program Has A Record-Breaking Year
The PA 529 College Savings program has reported that 2014 was its best year with record breaking number of accounts, amounts contributed and total assets.
“The fund has done extremely well, the Treasury has done a really tremendous job managing these investments, but it’s also due to the increase in program participation,” said Carrie Lepore, community and outreach director for PA 529.
The number of accounts grew 6.2 percent from 2013. People contributed $447.3 million in 2014 — 6 percent more than was saved in 2013.
Lepore said there are many advantages to opening a PA 529 Plan with state tax deductions of $14,000 per beneficiary per year, tax deferred growth and tax free withdrawals for college expenses. Investments grow at average annual rate of 7.15 percent, and an average 3-year rate of 10.07 percent.
The program encourages families to open the fund as soon as your child starts public school, putting former child care expenses invested in the future, and Lepore stresses that it’s never too late to open an account.
“So by putting funds that a family would intend to pay for even current semester expenses into a PA 529 account, and then paying for those qualified expenses from the account, a family can actually save 3.07 percent on their expenses. That 3.07 percent is the current PA income tax rate,” said Lepore.
The program has been around since 1993, before the federal government made the program a law for states. Since 2009 the total assets of the program has grown by 110 percent, and the number of accounts has risen by 40 percent. Today there are nearly 198,000 accounts.