Plan Ahead Kit: Lifetime Insurance Coverage for Children

Frequently Asked Questions

What is a college fund?

529 plans can be “savings” plans or “prepaid tuition” plans. Savings plans are an investment account that you contribute to, and your account grows based on market returns. Prepaid tuition plans allow you to directly purchase tuition based on today’s cost for future use.

You should consider the flexibility of a savings plan account versus the tuition guarantee of a prepaid tuition account. Note that a prepaid account is designed for use at colleges in your state of residence (or the beneficiary’s state of residence).

What are max total contributions?

By Federal law, these state plans must have a cap on total contributions. When you reach the maximum for your chosen plan’s contributions your account will continue to earn returns but you cannot make additional contributions.

What are the state tax benefits for college funds?

Each state determines how their plans are structured, and many of those states offer tax advantages, such as state tax deductions, deferral of taxes and earnings and tax free withdrawals. This is important because when taxes are deferred on earnings on your savings plan, you may experience significant additional growth compared to a taxable investment. This is what creates the benefit of “Planning Ahead”.

Which states offer "tax parity" on your contributions?

If you live in these states, you’ll receive the same tax benefit when contributing to any college savings account — even if it’s sponsored by another state.

  1. Arizona
  2. Arkansas
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Pennsylvania

About Us

American Income Life is an international Company protecting working families in the United States, Canada, New Zealand, and through our wholly-owned subsidiary, National Income Life Insurance Company in New York.

American Income Life has served working class families since 1951 with life, accident, and supplemental health products to help protect members of labor unions, credit unions, associations, and their families. AIL representatives develop longterm relationships with clients and meet them where they are most comfortable … their home.

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