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When Can You Start a Georgia 529 Plan? (And Get Tax Savings)


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You can start a 529 plan in Georgia at any age — even before your child is born. Here’s how to do it and how you can save on your taxes.

What’s the advantage of opening a 529 plan early?

The main advantage of opening a 529 plan early is taking advantage of compounding interest. Generally, the earlier you start, the less you have to save per year to reach the same amount.

You also usually don’t need to wait until you know if and where your child will go to school. If your family moves out of Georgia, you can bring your plan to a new state.

If your child doesn’t end up needing the money, you have other options discussed below.

Note: If you choose a prepaid tuition plan that gets treated as a 529 plan, that specific plan may have restrictions according to its plan terms.

What’s the age limit to open a 529 plan in Georgia?

Georgia has no age limit on the beneficiary of a 529 plan. Many parents, grandparents, or other family members choose to start a 529 plan as soon as a baby is born.

In order to open a 529 plan, you’ll need the beneficiary’s Social Security Number. That’s why most families open a 529 plan after a baby is born and not as part of a baby shower.

It is possible to open a 529 plan before a baby is born or even for children you’re planning to have years in the future. You can’t do it directly, though.

If you want to open a 529 plan for a child who isn’t born yet, you have to pick a beneficiary who is already alive. You can then change the beneficiary later (more on that later).

The person opening the 529 plan has to be at least 18 years old. This requirement is in place for similar reasons to why an adult has to open a bank account for a minor.

Since 529 plans are usually a gift for a child, the needing to be 18 rule usually doesn’t make a difference. One exception is when a teenager wants to save his or her own money for college.

Other options for teenagers who haven’t turned 18 include opening a regular savings account, buying savings bonds through Treasury Direct, or opening a Roth IRA.

How much do I have to contribute?

If you choose Georgia’s Path2College 529 plan, you can open the account with as little as $25. You don’t have to commit to investing a specific amount on an ongoing basis.

If you choose to use payroll direct deposit, there is a minimum of $15 per pay period. If you need to stop payroll deductions for any reason, you can usually do so and keep the funds you already invested in the 529 plan.

How long do you have to use a 529 plan?

There’s no time limit to use the Path2College 529 plan in Georgia. That’s because it’s an investment plan rather than a prepaid tuition plan.

If you choose to use a private prepaid tuition plan, you usually have to use the benefits by a certain age or within a certain number of years after investing in the plan.

Other states, including neighboring Alabama and Florida, require you to use their state prepaid tuition plans within 10 years of the beneficiary’s projected college entrance date.

What happens if your child doesn’t go to college?

If your child doesn’t go to college, some trade schools and technical schools also fall under qualified higher education expenses that can be paid for with a 529 plan.

If the named beneficiary doesn’t pursue any education at all, your options include:

  • Choose another family member as the beneficiary of the plan
  • Withdraw the funds for yourself (you’ll pay taxes plus a 10% penalty on the withdrawal)
  • Transfer account ownership to the same beneficiary for possible future use

Important: If you choose a prepaid tuition plan instead of an investment portfolio option, read the terms carefully as your options for using the plan may vary.

If you choose to transfer account ownership, your child can choose to withdraw the money (and pay taxes and penalties) or keep the plan for his or her future children.

Once your child becomes the owner of the plan, you have no legal say in how he or she uses it. If you want to make sure it’s used for your grandchildren, don’t transfer ownership — just change the beneficiary.

What happens if your child doesn’t use all of the funds?

If your child doesn’t use all of the funds, your options are usually the same as if he or she doesn’t go to college at all.

You may also be able to make a withdrawal with taxes but no penalties if the beneficiary receives a scholarship, attends a military academy, becomes permanently disabled, or dies.

Does Georgia offer a state tax deduction for 529 plan contributions?

Yes, there are Georgia state tax benefits for 529 plan contributions even though there are no federal tax benefits.

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