Anyone interested in saving for a child’s college education can benefit from investing in a 529 College Savings Plan. Created by Congress to help families afford rising college costs, the earnings grow federal income tax-free, and qualifying withdrawals may also be free from federal income tax. Modern Woodmen investors can choose between several 529 College Savings Plans.

Advantages

Tax-deferred growth
Earnings on 529 College Savings Plan investments grow federally income tax deferred, so funds accumulate more rapidly than they would in a fully taxable account.

Tax-free distributions
Qualified distributions are free from federal income tax.  Qualifying expenses include tuition at most accredited colleges and universities (and some technical and vocational schools), educational supplies, room and board (for those enrolled at least half-time), and other expenses.

Wide range of contributions
Most 529 College Savings Plans allow for a wide range of contributions, from as low as $25 per month to as much as $250,000 or more.  Additionally, investors can contribute up to $65,000 per beneficiary ($130,000 for married couples) in a single year without triggering federal gift taxes. (However, they cannot contribute again for five years if they choose to do that.)

Control of your account
With a 529 College Savings Plan, you control your investments and retain the option of changing the plan beneficiary, pursuant to plan-specific rules.  In addition, all contributions are excluded from the donor's taxable estate, subject to look-back rules, and there are no income limits that exclude taxpayers with large incomes from making contributions.

Professional investment management
Mutual funds have become the predominant investment vehicle for 529 College Savings Plans, combining professional investment management with excellent diversification and investment choice.  Many plans also offer age-based portfolios, which seek to invest assets in pre-determined allocations deemed appropriate for beneficiaries in certain age groups.  As beneficiaries grow older, the asset mix becomes more conservative, meaning they have a greater chance of protecting contributed funds.  Static portfolios are also available, in which investors are given a choice of predetermined portfolio allocation models ranging from conservative to aggressive.