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Illinois 529 Plans: Maximizing Your College Savings
Planning for your child’s college education can be a daunting task, both financially and logistically. Fortunately, the state of Illinois offers three college savings plans to help you navigate this process: Bright Directions College Savings Program, Bright Start College Savings, and College Illinois. In this comprehensive guide, we will delve into the details of each plan, including their types, fund families, minimums, maximum contributions, tax benefits, and residency requirements.
Bright Directions College Savings Program
The Bright Directions College Savings Program is a traditional 529 plan designed to provide tax benefits while investing in your child’s future education. This plan is advisor-sold, so it’s essential to consult a financial advisor in your state for assistance.
Type: Advisor-sold
Fund Family: Various
Minimums: Contact Advisor
Maximum Contributions: Currently, the maximum account balance in your Illinois 529 plans is $350,000. However, the contribution limit may increase over time, allowing you to invest more.
Tax Benefits: Illinois residents can enjoy tax deductions of up to $10,000 for single filers and $20,000 for married filers on their state income taxes. Additionally, earnings are not subject to federal income tax. Even out-of-state participants can benefit from federal tax advantages.
Residency: Open to residents of the United States
You can find detailed information about the Bright Directions College Savings Program on the official website.
Bright Start College Savings
The Bright Start College Savings plan is another option for Illinois residents to save for their child’s education. It is a traditional 529 plan that can be purchased directly from the state or through a financial advisor.
Type: Direct and Advisor-sold
Fund Family: OppenheimerFunds Inc.
Minimums: Initial deposit of $25, subsequent contributions of $15
Maximum Contributions: Similar to the Bright Directions plan, the current maximum contribution limit for the Bright Start College Savings plan is $350,000.
Tax Benefits: Illinois residents can deduct up to $10,000 on their state income taxes for single filers and $20,000 for married filers. Like other 529 plans, federal income tax on earnings is waived. Out-of-state participants can still enjoy federal tax benefits.
Other Benefits: The Bright Start College Savings plan offers a reward program through Upromise. By making purchases with your card, you can earn reward points that convert into account contributions.
Residency: Open to residents of the United States
To learn more about the Bright Start College Savings plan, visit the official website.
College Illinois
In addition to the traditional 529 plans, Illinois also offers the College Illinois plan, a pre-paid tuition program that allows you to lock in today’s rates for college expenses. This plan covers in-state and out-of-state public universities, community colleges, and selected private colleges and universities nationwide.
Type: Pre-paid college tuition plan
Eligible Institutions: In-state and out-of-state public universities, community colleges, and selected private colleges and universities
Tax Benefits: While the College Illinois plan does not provide tax deductions, it offers the advantage of securing tuition rates at today’s prices, protecting against future increases.
Residency: Open to residents of the United States
For more information about the College Illinois plan, visit the official website.
Comparing the Plans
To help you make an informed decision, let’s compare the three Illinois 529 plans based on various factors:
| Plan | Type | Fund Family | Tax Benefits | Residency | Maximum Contributions |
| Bright Directions | Advisor-sold | Various | State tax deduction, federal tax-free earnings | US | $350,000 |
| Bright Start | Direct and Advisor-sold | OppenheimerFunds Inc. | State tax deduction, federal tax-free earnings | US | $350,000 |
| College Illinois Pre-paid | Pre-paid tuition plan | N/A | Tuition rate lock-in for selected institutions | US | N/A |
Conclusion
Planning for your child’s college education is a crucial investment in their future. Illinois 529 plans offer a range of options to suit your needs and preferences. Whether you choose the Bright Directions College Savings Program, the Bright Start College Savings plan or the College Illinois pre-paid tuition plan, you can take advantage of tax benefits and secure a brighter future for your child’s education.
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