A Legacy for Your Great-Grandchildren: The 529 Plan Blog

Four generations gather around the family table for Easter this year. Your granddaughter is proudly showing off her new baby, which makes you a great-grandparent.

To be honest, you didn’t think you’d live to see the day. You’ve gotten older, but you are still strong and vibrant, and no one needs to help you out of a chair.  But your age and status as a great-grandparent do accord a certain level of respect.

You don’t have to reach over the table to get a second helping of dessert–it’s brought to you. (And no one would dare ask you to change a diaper.) But that isn’t why you’re so happy this Easter.

The real reason is that you are waiting for the right moment to tell your granddaughter that you are leaving the legacy of a college education for her new child. This means one less worry for her and one more contribution securing your family’s future. You're really glad you took the time to speak with a personal financial advisor to set up the account. 


Living Long Enough to See Your Great-Grandchildren

It’s true, people are living much longer these days. You probably have lots of friends or parents of friends who are in their 80’s and 90’s. Even someone living past 100 is not so unusual now. The number of people living to 100 has grown almost 66% over the last three decades.

In the old days, there were so few people who made it to 100 that the President would send letters to those lucky few wishing them a happy birthday.

Willard Scott of the Today Show announced their birthdays during his weather forecast, often featuring pictures of the seniors sitting in chairs with an afghan spread over their legs, surrounded by family.

Now the term “old” is relative. Today, if you hear about someone who passed away at 85, you might utter what a shame it is that the person died so young.

The Gulf Coast of Florida is ground zero for golfing, traveling, volunteering, and driving among our growing population of senior citizens. It’s not only the kids who come to Florida to visit Grandma and Grandpa, but also the grandchildren, often with great-grandchildren in tow.

College Tuition

a small investment graphic

The cost of college has gotten out of hand. There was a time that a summer job could pay for a year’s worth of college tuition.  

Today, some college graduates leave with more than $200 thousand in debt-enough to buy a single family home in many locations.  

As a great-grandparent, you may not have the ability to cover the entire cost of a great-grandchild’s college education, but a small investment now can grow significantly in the 18 years before their first day of freshman year.

529 Plan

The 529 plan is a great investment vehicle for this purpose. A 529 plan allows you to designate the beneficiary, your great-grandchild in this instance, and contribute up to the annual gift tax exclusion each year. For 2022, the exclusion is $16,000.

It also has the benefit of growing tax-deferred, and when your great-grandchild uses the money for allowable education expenses, the distribution is not taxed. In most cases, the 529 plan is not considered part of your estate when you die.

Of course, you should consult your tax advisor before setting up an account and making a contribution.

You can set up a 529 plan with your personal financial planner, who will discuss the various plans available. Each state has its own plan, and there may be some state tax savings associated with your contributions.

Leave a Legacy

Your gift of a college education to a child, grandchild, or even a great-grandchild can help to ensure a prosperous future for your family. There is truly no greater legacy than this.

 

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At Medallion Financial Group, we believe financial planning is about Family. We have been helping families invest in the future since 1987 through a holistic planning approach. We recognize there are a variety of needs when it comes to retirement planning, plan rollovers, annuities, college planning, life insurance options, and investment management. It is easy to get lost in a sea of choices. Our financial advisors help with the basics and beyond to enable our clients to get the education, advice and management they need to retire with confidence.

Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.

We strive to exceed client’s expectations – because we have high expectations of ourselves.