What is a 529 College Savings Plan?
A 529 college savings plan is a tax-advantaged account with high contribution limits designed to help you pay for college expenses. Money in a 529 college savings plan has tax advantages, is professionally managed, and may benefit from the power of compounded growth. You can choose from multiple investment options for your contributions to the 529 plan and start an account at any time, with as little as $25.
Saving with a 529 can be an important part of making college affordable. Combined with other sources, such as financial aid and loans, a savings plan can make dreams of college a reality.
It’s good to know that 529 savings generally do not affect your child’s ability to qualify for financial aid as the savings are treated as belonging to the account owner (such as a parent or grandparent) rather than the child.
The money you save in your 529 plan can be used for higher education expenses in New Mexico or at an out-of-state college.
It Pays to Live In New Mexico
Each state operates its own 529 plan. While you don't need to live in the state or even go to college in-state to invest in New Mexico’s 529 plans and enjoy federal tax benefits, residents enjoy some additional state tax benefits.
If you live in New Mexico, you can deduct contributions to New Mexico's 529 College Savings Program dollar for dollar off of your state taxable income. New Mexico is one of only four states to offer an unlimited deduction to its residents.
The state of New Mexico sponsors two plans: a direct-sold plan and an advisor-sold plan.
The Education Plan
(New Mexico’s Direct-Sold College Savings Plan)
The Education Plan lets you open a tax-advantaged account directly and choose from a variety of investment options. While there will be some fees, this option will be less expensive than the advisor-sold plan because you are investing without the assistance of a financial advisor who may charge for their services. The Education Plan offers a variety of investment choices designed to meet your needs, situation, and risk tolerance.
If you think you can spend a little time reading the information provided on the plan website and select one of the investment options offered, then this plan may be for you.
The Education Plan College Savings Program is managed by OppenheimerFunds
(New Mexico’s Advisor-Sold College Savings Plan)
Scholar’s Edge also lets you take advantage of tax-advantaged savings, but you will have a financial advisor to help you select investment options. You and your advisor will be able to choose from a wide menu of portfolios or craft a completely custom savings plan.
If you don’t have enough time to research and understand the options available in the direct-sold plan, and would like the assistance of a financial advisor in choosing investment options, then this plan may be for you. Fees and/or commissions for these services will vary; ask your financial advisor for more information.
New Mexico's Scholar's Edge is managed by OppenheimerFunds