Broker Check

The Illinois College Savings Summit

May 23, 2018

When it comes to college planning, a 529 account can be a good way to pursue your goals.

Earlier this month, I attended the 2018 Illinois College Savings Summit in downtown Chicago for a presentation on the ins-and-outs of college planning and 529 accounts. To refresh your memory, 529s are tax-advantaged investment accounts that are used to save and pay for higher education expenses.

The audience of 50 or so financial advisors were greeted by Illinois State Treasurer Michael Frerichs, who administers the Illinois 529 programs, and listened to an in-depth presentation from a representative of Union Bank & Trust who manages these programs. The 529 presentation gave me better perspective on planning for college and a deeper insight on the 529 programs that Illinois offers.

I'll spare you the intricacies of the presentation and cut to the chase. Here are some key advantages of utilizing a 529 account:

  • When you contribute to a 529 account, the earnings on your contributions will grow tax-deferred, and if those earnings are used for qualified higher education expenses (Tuition, room and board, books and supplies) they can be withdrawn from the account without being taxed at the federal or state level.
  • When you open a 529 account you will be asked to list one beneficiary. In the event that the beneficiary receives a scholarship or does not attend college, you can change the beneficiary to another family member. Otherwise, you can still withdraw your contributions and earnings, but your earnings will be taxed as ordinary income in addition to incurring a 10% penalty.
  • For families with several college-bound children, you're able to open one 529 account and switch the beneficiaries back-and-forth to pay for each child's higher education expenses as needed. You can also open multiple 529 accounts if you prefer.
  • Illinois taxpayers may receive a state income tax deduction in the amount of their 529 contribution, capped at $10,000 per individual and $20,000 if filing jointly.
  • Unlike contributing to a Traditional IRA or Roth IRA, 529s do not typically have annual contribution limits and there are no eligibility phaseouts based on income, so families of all income levels can contribute.

College probably isn't getting more affordable any time soon. If you plan on providing for the college expenses of a loved one(s), consider how a 529 account can help you and your family plan for the journey ahead. And as always, feel free to reach out to our team if you have any questions along the way.




Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.