Discover the Difference: Saving for Catholic Education
by Diocese of Des Moines | June 18, 2020
Did you know that you can set aside funds now to help pay for your child's Catholic school education with an Iowa 529 plan? Starting to save early can make a big difference and opening a 529 plan only takes about 10 minutes. Read on to learn if a 529 plan is right for you, and discover how you can start saving for your child's future today.
What is an Iowa 529 Plan?
A 529 plan is a type of investment account you can use to save for qualified education expenses, including K-12 Catholic school tuition. 529 plans are sponsored by states and other financial institutions, all with different investment and advisor options.
Who can establish a 529 Plan?
While typically a parent establishes an account, anyone can open an account if they have the child’s full name and Social Security Number.
Who can contribute funds to a 529 plan?
Anyone can add to the individual child’s account and contributing to a 529 plan is a great way to celebrate a baptism, birthday or other special occasion. We recommend checking with your tax advisor if you live outside of Iowa.
How much can I contribute?
Individuals can contribute up to $75,000 in a single year for each beneficiary ($150,000 for a married couple filing jointly). Beneficiaries can use up to $10,000 per year for K-12 tuition.
How can I use a 529 plan to pay for my child's tuition?
Iowa taxpayers can use assets from their 529 plan to pay for K-12 tuition with no state tax consequences. The student must attend an accredited elementary or secondary school in Iowa that adheres to the provisions of the federal Civil Rights Act of 1964. All K-12 Catholic schools in the Diocese of Des Moines meet these criteria.
Is there a fee to open an account?
There is no fee to open an individual Iowa 529 account, but there is a $25 minimum to establish the account and each child needs their own account.
What are the Iowa tax deductions?
With a 529 plan, you can save on taxes while you save for your child's education. Iowa taxpayers can deduct up to $3,439 for 2020 of their contributions per beneficiary. This deduction applies to each beneficiary 529 account they contribute to and own. For example, married participants who contribute to separate accounts on behalf of their two children could deduct up to $13,756 (4 x $3,439) in 2020. As always, consult with your tax advisor regarding your specific deductions and eligibility.
What if my child doesn’t attend private school or go to college? What happens to the funds?
Don't worry! 529 plan funds can be transferred to a sibling or a first cousin for use on qualified education expenses.
How do I get started?
For more information about the Iowa 529 Plan, visit www.collegesavingsiowa.com or contact Brooke Pulliam at 515-237-5080 or firstname.lastname@example.org.