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GA 529 Plan: Upcoming Changes

If you are a Georgia resident with a current GA 529 plan or you plan to enroll in the near future, take note that there have been some recent changes to the plan. As we wrote in a blog last year, college cost is rising. If you intend to fund your child’s higher education, either fully or partially, early planning is essential.

What is the GA 529 plan?

The Georgia Path2College 529 Plan is one of the most popular investment vehicles for saving for college and the one most widely seen at Wiser Wealth Management. 529 plans are invested, grown and distributed tax free if used for certain qualifying expenses, such as tuition and certain fees. Families can also access up to $10,000 annually for K-12 school tuition. There are no contribution limits, but the maximum account size allowed for Georgia is currently $235,000. Parents, grandparents, other relatives or family friends can gift up to the annual exclusion of $15,000 or up to 5 years prorated at once of $75,000 per filer or $150,000 for married filers.

What changes are coming?

For 2021 contributions, Georgia has allowed an increased deductible contribution of up to $8,000 per year per beneficiary for joint filers, and $4,000 for single filers for the Path2College plan. GA 529 plans are invested in certain individual mutual funds or managed as age-based funds that move from conservative to aggressive by large investment companies.

Starting in May 2021, Georgia families can look forward to other improvements to the plan. The plan recently surpassed the $4 billion mark in assets, and at their annual meeting in March 2021, the Georgia Higher Education Savings Plan Board approved lowering program fees by nearly 70%. The board also decided to waive the state’s administrative fee and approved a new lower cost contract with TIAA-CREF Tuition Financing, Inc. who manages the plan.

What do the changes mean?

This means the program management and administrative fees will fall significantly from 0.13% to 0.04%. With the recent increase in deductions and these new improvements in the fund, the Georgia Path2College Plan could become one of the most attractive in the country. If you have any questions, please let us know. At Wiser, we do not personally manage GA 529 funds; so we usually suggest GA residents invest through this plan. As fiduciaries, we believe in lowering costs and looking out for the best interest of our clients and we think the GA 529 plan is a great step for Georgians planning to fund their children’s higher education.

Matthews Barnett, CFP®, ChFC®, CLU®
Financial Advisor

 

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Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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