FRANKFORT, Ky.— The Kentucky Education Savings Plan Trust (KESPT) is encouraging families to review their education savings strategy this tax season and consider the tax-free growth opportunity offered by Kentucky’s 529 savings plan. Not only can earnings grow tax free in a KESPT account, but withdrawals are also tax-free when
used to pay for qualified education expenses.
“Families have many financial responsibilities, so we encourage parents to start saving while their children are young,” said David Lawhorn, KESPT program manager. “Families who make saving a priority often feel more prepared for education expenses as their children get older, and they have more time to take advantage of tax-free
growth opportunity.”
KESPT offers other advantages for Kentucky residents, too. An account can be started with as little as $25 and can be used at any qualified institution in the nation. Additionally, KESPT savings are not included in determining Kentucky need-based financial aid for beneficiaries of Kentucky residents who plan to attend college.
(However, other federal and institutional aid programs may take the 529 plan account balance into consideration when determining eligibility, so account owners should check with their preferred institution and refer to the KESPT Plan Disclosure Booklet.)
Parents can open a Kentucky 529 account by visiting kysaves.com and clicking the “Open an Account” button. While on the website, they can also invite family and friends to make secure contributions with KESPT’s eGifting feature. Funds may be transferred to another eligible family member if the beneficiary receives a scholarship or doesn’t need to withdraw the full amount saved.
Kentucky families are also invited to participate in the annual Dream Out Loud Challenge for a chance to win a $1,000 savings plan account and $500 for their school. Students in grades Pre-K through 6 may enter Dream Out Loud by submitting an original drawing, poem, essay or video answering the question: “How will I change
the world after I go to college?” Parents can learn more by visiting www.kysaves.com/DreamOutLoud. Dream Out Loud runs from January 15 through March 19, 2018. No purchase necessary. Void where prohibited.
New parents also have an incentive to help them start saving. Parents of babies born in Kentucky within the prior 12 months may enter for a chance to win a KESPT 529 plan account in the amount of $529. The deadline to enter is Sept. 30, 2018, and a winner is randomly drawn every calendar quarter. For official rules, prize details and to enter, families can visit www.kysaves.com/baby.