No better time than right now for 529

Feeling squeamish about College Go week next week because you don’t have adequate savings?

Let’s dig deeper into the 529 college savings plan. It does not need to be scary and the most important item is to start a 529 plan which does not demand a large expense to initiate.

Why start a 529 plan you ask? Research has shown that one with a college 529 plan is 74 percent more likely to continue on to post-secondary education than one without the plan. Additionally post-secondary education graduation rates are higher for those with a plan compared to those without.

For those of us in Indiana, it is very important to check and make sure that one is using an “Indiana approved” college 529 savings plan. Hoosiers are blessed with a great direct tax savings when making plan contributions.

Here is how it works. For anyone filing taxes, contributions up to $5,000 receive a direct 20 percent return on the state income taxes. Therefore if one is saving for his or her own family plan, a financial return of 20 percent will occur within a year as one completes tax preparation. The maximum one can receive in tax benefits is $1,000 regardless of how many plans you contribute toward.

If your child is drawing closer to high school graduation and you have not started a plan but have some other savings mechanism, it is very important to start one yet this year so you can have tax benefits yet this year. Additionally grandparents and others etc. can also reap this benefit. For example if grandparents gift $100 to each grandchild and have six grandchildren, the gift could be given to the grandchildren’s 529 plan totaling $600 for all grandchildren. When filing state taxes the grandparents would receive back a direct $120 credit. Please don’t confuse this with an income tax deduction that lowers your income, rather this is a direct credit. Therefore the gift total of $600 has a final cost of $480 for the grandparents.

With whom do you get started and what about risk you might say? There are various local financial institutions who offer the Indiana 529 plan. One may invest with minimal risk plans that involve secure funds though the issue is very small rates of return typically with these funds. Or one may invest in mutual funds that given time intervals begin with more risky though typically higher return funds since time is on the side of a prospective student who is in Kindergarten or younger.

Still the most important issue is that now is the time to decide where you want to get started and do start a plan! Get your child involved as well in saving with the plan.

For those interested in attending Purdue University, campus is coming to our area via the Boiler Bridge program on Oct. 18 at 7 p.m. in neighboring Clay County at their fairgrounds.

It is part of a statewide series of community events hosted by Purdue Agriculture to help college-curious youth and parents learn more about all fields of study at Purdue University while showcasing local Purdue Extension programs. Free and open to the public, Boiler Bridge events are intended to connect the Purdue campus to communities throughout Indiana.

Purdue academic counselors will be available to answer questions concerning college costs, available scholarships, financial aid, campus life, career opportunities, placement resources and more. Youth interested in college, and their parents, can also gain specific details about different paths through junior high or high school that could serve as springboards to Purdue academic degrees. Parents can also find out more about important application dates, campus housing options and Purdue dining. These experts will be able to answer questions about any field of study at Purdue.

Visit www.extension.purdue.edu/putnam or you can contact the local Purdue Extension Office by calling 653-8411 for more information regarding this week’s column topic or to RSVP for upcoming events. It is always best to call first to assure items are ready when you arrive and to RSVP for programs. While many publications are free, some do have a fee.

Upcoming events

Sept. 27 -- Master Gardener Roundtable, Owen County Fairgrounds.

Sept. 29 -- Indiana Extension Homemakers Association Achievement Night, 7 p.m., Fairgrounds.

Oct. 5 -- Dining with Diabetes Workshop 1: What is Diabetes?, Putnam County Hospital.

Oct. 18 -- Boiler Bridge, 7 p.m., Clay County Fairgrounds (preregister).

Nov. 6 -- Putnam 4-H Leader Recognition and Member Awards Program, 2 p.m., Fairgrounds.

Nov. 13 -- Putnam 4-H launch (enrollment kickoff), 2-4 p.m., Fairgrounds