Unlocking Education: Your Essential Guide to 529 Investing for Illinois Families

There are two main flavors:

• Education Savings Plans: These are investment accounts where your contributions grow tax-deferred, and withdrawals for qualified expenses are completely tax-free.

• Prepaid Tuition Plans: These allow you to "lock in" future tuition rates at participating institutions by prepaying today.

The Power-Packed Benefits of 529 Plans

Why should a 529 plan be at the top of your education savings strategy?

• Tax Advantages Galore: Your money grows without being taxed year-over-year, and when it's time for school, qualified withdrawals are 100% tax-free. Plus, as an Illinois resident, you get an extra perk!

• Unmatched Flexibility: Life happens, and plans change. 529 funds can be used at eligible schools across the country and even internationally. If your child's path shifts, you can easily change the beneficiary to another qualified family member.

• High Contribution Limits: Illinois plans boast some of the highest contribution limits in the nation, allowing you to save up to a remarkable $450,000.

• Minimal Financial Aid Impact: Unlike some other savings vehicles, 529 accounts generally have a lower impact on your eligibility for federal financial aid, keeping more opportunities open for your student.

• Savvy Estate Planning: Contributions can strategically reduce your taxable estate and are considered completed gifts for federal gift tax purposes.

Illinois' Winning Hand: Bright Start, Bright Directions, and College Illinois!

Illinois offers a robust suite of 529 options to fit every family's needs:

Let's look at the specific advantages for Illinois families:

• Bright Start 529 College Savings Program: If you're a DIY saver, Bright Start is for you. Open an account online with no minimum contribution and enjoy some of the nation's lowest fees. You'll have a wide range of investment portfolios to choose from, matching your risk tolerance and goals.

• Bright Directions Advisor-Guided 529 College Savings Program: For those who prefer professional guidance, Bright Directions offers an extensive lineup of investment choices with the support of a financial advisor.

• College Illinois! Prepaid Tuition Program: This unique plan allows you to prepay future tuition at Illinois public colleges and universities at today's prices, offering peace of mind against rising costs.

The "Illinois Advantage" You Can't Ignore

What truly sets Illinois 529 plans apart?

• Generous State Income Tax Deduction: This is a HUGE benefit! Illinois taxpayers can deduct up to $10,000 (single) or $20,000 (married filing jointly) in contributions to Illinois-sponsored 529 plans from their state taxable income each year. This means real money back in your pocket.

• No Minimums, Easy Access: You can start saving with as little as $1! There are no fees to open or maintain an account, making it accessible to virtually any adult with a Social Security Number or ITIN.

• Illinois First Steps: If you have a child born or adopted on or after January 1, 2023, Illinois gives you a head start with a $50 seed deposit for new Bright Start or Bright Directions accounts!

• Employer Incentives: Did you know your employer might even help? Businesses can claim a tax credit for 25% of their matching contributions to an employee's Illinois 529 plan, up to $500 per employee annually.

Beyond Tuition: Qualified Expenses and Unmatched Flexibility

529 funds aren't just for traditional college tuition. They cover a broad spectrum of qualified educational expenses:

• Tuition and fees

• Room and board (if enrolled at least half-time)

• Books, supplies, and equipment

• Computers and required software

• Special needs services

• Expenses for registered apprenticeship programs

• Up to $10,000 in student loan repayments per beneficiary

And what if plans change entirely?

• You can easily change the beneficiary to another eligible family member.

• A recent federal law allows for a one-time rollover of up to $35,000 (if the account is at least 15 years old) into a Roth IRA for the beneficiary, offering an excellent backup plan.

Starting Your Illinois 529 Journey

Ready to unlock these benefits? It's simpler than you think:

1. Choose Your Plan: Decide if Bright Start (DIY) or Bright Directions (advisor-guided) is the right fit. College Illinois! is an excellent option for locking in tuition.

2. Open an Account: For Bright Start, it's a quick online process. For Bright Directions, connect with a financial advisor. Remember, no minimum deposit is required.

3. Select Investments: Choose portfolios that align with your financial goals, from age-based options to individual fund portfolios.

4. Contribute Consistently: Set up one-time or recurring contributions. Even better, family and friends can contribute, and their contributions may also be deductible if they're Illinois taxpayers!

5. Monitor and Adjust: Periodically review your investments and make adjustments as needed.

Important Considerations

While 529 plans are powerful, it's wise to be aware of a few points:

• Qualified Expenses are Key: Withdrawals for non-qualified expenses will incur income tax and a 10% penalty on earnings.

• Investment Risk: Like any investment, the value of your account can fluctuate with market performance.

• State-Specific Benefits: Remember, the generous Illinois tax deduction only applies to contributions made to Illinois-sponsored plans.

Invest in Their Future Today

Saving for education is a profound act of love and foresight. With Illinois' compelling 529 plans, you have a flexible, tax-advantaged, and impactful way to secure a brighter future for your loved ones. Don't wait – explore the options available to you and start building that educational nest egg today!

For more information and personalized guidance, please feel free to reach out to Vistamark Investments LLC. You can contact us at 312-895-3001, visit our website at www.vistamarkllc.com, or send us an email to info@vistamarkllc.com.