Nebraska State Treasurer Don Stenberg says Nebraskans who are looking for the perfect Christmas gift should consider setting up 529 college savings plans for their children or grandchildren through the Nebraska Educational Savings Plan Trust (NEST).
“Setting up a 529 college savings account for a child or grandchild—or contributing to an existing account—is one of the most thoughtful and long-lasting gifts you can give,” said Treasurer Stenberg, Trustee of the Nebraska Educational Savings Trust. “A state-sponsored 529 savings account provides assurance and peace of mind for both the giver and the recipient. Knowing that your money is invested wisely and that your child or grandchild will be in a better position to pay for college is one of the best ways to celebrate the holidays and share the holiday spirit.”
The Nebraska Educational Savings Trust offers four college savings plans from which to choose: the NEST Direct College Savings Plan, the NEST Advisor College Savings Plan, the TD Ameritrade 529 College Savings Plan, and the State Farm College Savings Plan. First National Bank of Omaha is the program manager, and investments are approved by the Nebraska Investment Council.
“We have one of the best college savings programs in the country right here in Nebraska,” Treasurer Stenberg said. “That’s why more than 53,000 Nebraska families and more than 190,000 families nationwide are saving for college with NEST plans.” State-sponsored 529 savings plans take their name from Section 529 of the U.S. Internal Revenue Code.
“The NEST Direct Bank Savings Investment Option is FDIC insured and is an attractive choice for families seeking stability of principal, low risk, and locked-in earnings. The option is particularly attractive for families with children near college age,” Stenberg said.
The Treasurer said setting up a NEST college savings plan is easy and takes less than 10 minutes. Descriptions of the four plans can be found at the Treasurer’s Office website at www.treasurer.org. Click on the College Savings tab and then on the About the Plans link. The Treasurer recommends following these five steps:
Treasurer Stenberg emphasized that opening a new account or making a holiday contribution also provides tax savings to Nebraska residents.
An account owner—either single or a married couple—who contributes to a NEST plan and files Nebraska state income tax can deduct up to $5,000 of contributions per year or $2,500 per year if married filing separately. To qualify, the contribution must be completed online or postmarked no later than December 31.
Grandparents can take advantage of the Nebraska income tax deduction by opening and contributing to their own NEST accounts for their grandchildren. They cannot claim a deduction, however, if they make contributions to a grandchild’s account owned by the child’s parents.
In addition, the Treasurer said NEST account owners should consider taking advantage of the annual federal gift tax exclusion—up to $13,000 per beneficiary—by contributing to a NEST account before year end.
The NEST staff offers the following advice for delivering a special NEST gift: