Looking at the future of higher education costs is a daunting task for Oklahoma parents of growing children and their loved ones. However, a tax break has made the 529 plans an affordable and attractive opportunity to put money away now, in order to help pay the expenses of a child’s higher education costs later. Oklahoma offers some great tax breaks for residents who take advantage of their plans, making the plans even more attractive.
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Here are six facts about the Oklahoma 529 plans to consider when choosing the plan that is right for you.
- According to SavingForCollege.com, Oklahoma offers two major plans. The consumer 529 plan is the Oklahoma College Savings Plan, which is a direct-sold program using TIAA-CREF mutual funds. The second plan is the Oklahoma Dream 529 Plan, which is an advisor-sold plan that is a savings program by Allianz Global Investors. The second plan has a mutual-manager investment platform.
- The Oklahoma College Savings Plan has three different allocation options, including conservative, moderate, and aggressive. There are six portfolio funds under each one for a total of 18 options for investors. The investments become more conservative as the student gets closer to college age. There are also four multi-fund options to choose from, as well as a guaranteed option and an individual fund option.
- The Oklahoma Dream 529 Plan has six age-based investment plans, two static investment plans and 12 individual investment plans to choose from. The age-invested plan will adjust based on age and become more conservative as the child gets older. The static plans allow investors to control their own level of risk whenever they want to make changes. The individual plans allow a person to invest in different funds and investments.
- Individuals can contribute up to $14,000 a year without triggering the federal gift taxes. For married couples, that is $28,000 per year. There is also a 529 tax rule that allow people to contribute a maximum of $70,000 for up to five years at once, or $140,000 as a couple, without triggering the gift taxes.
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- According to OK4Saving.org, Anyone who contributes to the Oklahoma 529 College Savings Plan receives a tax deduction for a maximum of $10,000 a year, or $20,000 a year for couples filing jointly. The total money from other 529 plans is also eligible for the Oklahoma tax deduction. If the total money is not claimed that year, it can be carried forward for five years after contributing it. Investors outside of Oklahoma should check into their own state’s plans to see if the tax breaks might be better.
- The maximum contributions for the Oklahoma 529 plans cap out at $300,000. There is also a minimum initial contribution of $100 for the Oklahoma College Savings Plan, with a minimum of $25 added per investment. The Oklahoma Dream 529 Plan has a minimum contribution of $50 per investment option.
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