Hello friends!

This week we’ll discuss the ins and outs of college 529 plans. Then, did you know that our own Patrick is on the board of the National Capital Trolley Museum? We’ve got a story for you of how he fell in love with train travel and why he’s involved with this cool local site.

Many of you might have children or grandchildren who are planning to go to college or, in other ways, grow their education. You could help them make this investment in their future with a Section 529 plan. Although the name of this plan comes from Section 529 of the federal code, it’s state-administered.

A 529 plan is a tax-advantaged savings plan that helps pay for education, and it covers K-12 schooling and apprenticeships. There are two types of plans: prepaid tuition and savings plans. Savings plans grow tax-deferred, and withdrawals are not taxed if they are used for qualifying educational expenses. Prepaid plans, which are less common, allow the account owner to lock in college tuition at today’s rates by paying in advance. Prepaid plans are not available for K-12 education.

There are a few key things to understand about these plans:

  • State laws differ, so in some states, the person who funds the account may be eligible for a tax deduction for their contributions. Also, while there is no cap for contributions per year, some states limit the overall contribution, ranging from $235,000 to $500,000.
  • Savings and prepaid plans cover different things. Only savings plans cover K-12 education and college-related expenses like room and board–prepaid plans cover neither of those. Prepaid plans may also not be accepted everywhere, whereas savings plans can be used at just about any eligible institution.
  • You can invest in a 529 plan in any state, but investing in your state might get you a tax break.
  • You can transfer to another 529 plan once per year unless another beneficiary is involved. You can also transfer the plan to another beneficiary as long as that person is a family member, including a child, first cousin, spouse, in-law, step-parent or child, sibling, parent, or the spouse of any of the above.

If you’re interested in opening a 529 plan, give us a call. We would be glad to walk you through the details and help you pick the right one for your family.

As many of you know, Patrick has quite a long history with travel. He has been to and lived in countries all over the world.

“One of the reasons I was intrigued about joining the board is because I’ve always enjoyed trains,” Patrick said. When he was a child, his family made many international moves because of his father’s job. He remembers living in Myanmar in the 1960s, where his love of trains began.

“My parents rented an entire sleeper car–it had beds, a kitchen, all of it,” he said. “We took the train from Rangoon to the upcountry area, and the train dropped our sleeper car off on the side of the tracks. We stayed there for a few days, exploring, and the train picked us up on the way back to Rangoon. It was unforgettable.”

Patrick still travels by train often. A few years ago, he and his wife took the Trans Canadian Railroad from Vancouver to Toronto, making stops along the way, and really got to see and enjoy the beautiful country to our north.

When he travels internationally, he often chooses unique destinations and rarely visits the same place twice. Paris and London are two of his favorite cities, though, in part because they have such well-run underground rail systems that make it easy for residents and tourists to get around and experience all that the cities have to offer.

Patrick joined the NCTM board in 2015 after being recommended by his friend George Epperson, a dedicated volunteer at the museum when the existing board identified the need for a business owner’s perspective. Patrick looks at the future of the museum through that lens.

“One of the challenges the museum has is that it relies almost entirely on government funding,” he explained. “That means we go through an arduous grant process every year. I am working to build support for the museum in the business community to help increase funding and simplify the process.”

Patrick is impressed with the volunteers who spend many days and weekends at the museum helping school groups and other visitors enjoy the museum and learn about trains and trolleys. “The volunteers contribute so much to the experience, and many of them are there for 20 hours a week,” Patrick said. He hopes that when the museum is able to safely reopen, that the local community is able to come in and enjoy its many offerings.

Have a fantastic weekend!

Past performance is no guarantee of future results.  Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.