Indiana 529 Plan Offers Choices
If you plan to invest in an Indiana 529 plan, there are two main choices you can make – the CollegeChoice 529 Direct Savings Plan or the CollegeChoice Advisor 529 Savings Plan. The first one is best if you plan to invest on your own. It is easy to enroll and easy to use. The second one is designed for use with the help of a financial advisor.
Since this is the one that you will be handling on your own, let’s look at the CollegeChoice 529 Direct Savings Plan. The main features that it offers are the tax benefits, the inexpensive minimum contribution, the flexible investment choices, and the ability to maintain full control over your assets.
The tax benefits include tax-deferred growth, federal tax-free qualified withdrawals, special tax credit for Indiana residents, gift-tax and estate planning benefits. If you take out money for non-qualified reasons, that money is subject to federal, state and local income taxes and possibly a 10 percent federal penalty tax, as well as. The tax credit for Indiana taxpayers is 20 percent of their contributions to their Indiana 529 plan, to maximum of $1,000 credit per year.
You can contribute as little as $25. Actually you can open an account for $25. The maximum contribution is a total of $298,770 per beneficiary. The annual asset-based fees are very low, ranging from 0.35 percent to 0.95 percent. If you are an Indiana resident, there is no annual account maintenance fee and if you or the beneficiary is an Indiana resident, there is no annual account maintenance fee. Non-residents can open an Indiana 529 plan but the annual account fee is $20 but this is waived if the account balance is at least $25,000. Annual contributions can be as $13,000 per beneficiary individually. If you and your spouse file taxes jointly this is doubled. The CollegeChoice Advisor is similar but the investments are managed by asset managers.