Grandparents can save too

Learn about CollegeBound 529

Helping your clients save for their grandchildren's higher education

Contributing to a 529 plan is one way your clients can help their grandchildren get the education they need to succeed.

Just how expensive is a college education today?

It's probably been awhile since your clients have looked at the cost of college:

  • Four years at a public university can average $80,000.1
  • Roughly 70% of graduating college seniors carry student loan debt.2
  • The average debt load per student is approaching $30,000, with that figure increasing annually.2

The more money saved to pay for a grandchild's college education could mean less debt at graduation

Why grandparents may find 529 plans attractive

The account owner, whether that's your client or someone else, controls the money until ready to distribute to cover the student's college education cost.

Client's have access to diversified investment options, with earnings that are generally exempt from federal income taxes and most state taxes if used to pay qualified education expenses.3

CollegeBound 529 has no minimum initial investment, so your client's can get started small if needed. For estate planning purposes, grandparents can contribute up to $15,000 annually per grandchild, or beneficiary, with no gift tax. That gift doubles to $30,000 if they are married, filing jointly.

Do they want to make a larger contribution for estate planning purposes? They can contribute up to $75,000 at one time, and elect to treat it as a five-year gift with no taxes.

Client education

Learn more about CollegeBound 529

Source:, Frequently asked questions on gift taxes

1 Source:, Trends in College Pricing 2017

2 Source: The Institute for College Access & Success, October 2016

3 Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes. Rhode Island taxpayers who are account owners and contribute to CollegeBound 529 account are eligible for a deduction in computing state income tax for contributions made to CollegeBound 529 of up to $1,000 for married couples filing jointly and $500 for individual filers. Subject to certain conditions and requirements, contributions in excess of the annual limit can be carried forward and deducted in future years. If a participant makes a non-qualified withdrawal or certain transfers /rollovers to another state's program, the amount of the deduction may be "recaptured" and included in the account owner's Rhode Island income. Check with your tax advisor to see how 529 plans are treated for income tax purposes.