College Savings in Kentucky

College savings are a challenge for most families.  Fortunately, Kentucky has its own 529 Plan, which is a college savings (and investment) plan.  While many states allow out of state residents to invest in their plan, we’ll review the Kentucky plan and its benefits.

Note:  You may have heard of the Kentucky prepaid plan known as “KAPT,” but that was closed to new enrollees in 2004.  That’s why the KAPT is not being discussed in this article.

The Kentucky 529 Plan is called the “Kentucky Education Savings Plan Trust.”  This type of plans is called a “529” Plan because of the authorization for the plan is found in section 529 of the Internal Revenue Code.

Here’s a quick summary of the Kentucky 529 Plan:

• Enrollment.  You can enroll directly with the program.

• Supervision. Kentucky Higher Education Assistance Authority

• Management. The plan is managed by TIAA-CREF Tuition Financing, Inc.

• State residency requirements. None

• Possible owners. U.S. Citizens and resident aliens who are 18 years of age or older.  Custodians of UGMA/UTMA accounts and legal entities.

• Time or age restrictions. None.

• Contributions:
  • Maximum.  Account balances of $235,000 per beneficiary.
  • Minimum.   $25 or $15 (with payroll deduction.)

• Investment options.
  • Age-based
  • Static, including Guaranteed Option

• Taxation.
  • The state of Kentucky gives an exemption for all qualified distributions.
  • There is no federal income tax for all qualified distributions.
  • There are no state or federal income tax deductions for contributions.
  • Financial aid. Kentucky does NOT consider its 529 plan balances when evaluating financial aid.

• Fees. There are no enrollment fees or account maintenance fees.  There are management fees, depending on your choice of investments.

For additional information or to enroll, review the Kentucky 529 Plan details at http://www.kysaves.com/.  Because of the tax benefits and investment choices, it’s a great way to save for college.

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John Potter

John Potter is an Estate Planning and Elder Law attorney in the Charlotte, North Carolina, area with offices in Ballantyne and Huntersville. John has been designated as a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation and a Board Certified Specialist in Elder Law by the North Carolina State Bar.

John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.

John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.

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