IBC or 529?

...College Savings Food for Thought

What is a 529 College Savings Plan?

A 529 college savings plan is a tax-advantaged state-administered investment program that is authorized under Internal Revenue Code Section 529. These plans allow investors to save money in an account in which the earnings will grow free from federal income tax and, when used to pay for "qualified higher education expenses", may be withdrawn federal income tax-free. In many states, a participant can receive special state incentives, including state tax treatment that mirrors the federal tax treatment, tax deductions/credits and/or other state tax benefits, based on participation in their state’s program(s).
Earnings in a 529 plan grow tax-deferred and are free of federal income tax when used for qualified higher education expenses under Internal Revenue Code Section 529 (26 U.S.C. 529). Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance. Room and board expenses are also eligible for students enrolled half-time or more based on the current allowance for room and board determined by the eligible educational institution for federal financial aid purposes, or actual invoice amount charged by the institution to the beneficiary, if greater. In addition, qualified higher education expenses also include expenses of a special needs beneficiary that are necessary in connection with his or her enrollment or attendance at an eligible educational institution.

What are the tax benefits?

Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes.   Additionally, most states allow tax-deferred earnings and tax-free withdrawals for qualified higher education expenses, and some states allow families to deduct the full or a partial amount of their contribution from their state income taxes.

While many aspects of 529 plans sound very appealing to "the masses," how we think about what is going on here is vitally important.  Note that in the above descriptions I've highlighted each brief segment points us back to the idea that someone else (our government) is in control of the flow of our investment dollars going and coming.  This is really the fundamental difference between this seemingly benign savings plan and having true, 100%, control of your cash flow in every way including college savings.  If you were to engage the IBC teaching videos on this page you would receive a healthy quick education on how IBC promotes flexibility, versatility, and freedom.  If you read the above on 529 plans you have to ask yourself - am I getting those three values from this college savings option?

Further, once a 529 plan is exhausted of funds on use of school/educational purposes what do you really have to show for the savings (other than a diploma)?  With IBC as your college savings option, you not only have a safe cash growth environment, use of cash for anything in life including college, an ever increasing pool for wealth building beyond college and a financial tool for retirement and generational legacy.  All this happening with 100% access and no penalties to access funds. Finally, an IBC plan allows for you to apply for FAFSA funding while not being required to report your dollars on the form. Simply stated, IBC is truly a strong consideration for college funding and wealth building beyond college providing versatility, flexibility, and freedom.