Understanding 529 Plans
Learn the basics of 529 college savings plans, and get your college savings started with Bright Directions. We will help you with the important background information, and your investment professional can answer further questions and help you sign up.
What You Need to Know About 529 Plans
529 plans make great college savings options.
There are several tax savings benefits that can be received by opening a 529 college savings account. Any earnings grow tax-free and qualified withdrawals may be free from federal and state income tax.2 Learn how you can receive Bright Directions tax benefits.
529 plans help you save for future education expenses.
A 529 college savings plan is a type of investment account that can be used for education savings and is usually sponsored by a state. The name “529” comes from Section 529 of the IRS tax code, which gives these plans special tax breaks to encourage saving for education.12
529 plans are easy to set up and easy to use.
Accounts can be opened by almost anyone, there are no income limits, and anyone can contribute. You can use a 529 account to pay for qualified higher education expenses at most colleges and universities, and also at many technical, trade, vocational, and career schools. See how Bright Directions can help you save for college.
Who can open an account?
A Bright Directions account can be established by an individual, certain legal entities, a custodian under a state’s UGMA or UTMA statute, or a trustee of a trust. There are no income or residency requirements.
Who can be a beneficiary?
A beneficiary can be a future student and may be an individual, including the account owner, of any age. The beneficiary must have a valid Social Security number or taxpayer identification number. Each account can have one designated beneficiary.
Who can make contributions?
Parents, grandparents, or other relatives—anyone, really—can contribute to a Bright Directions account on behalf of the beneficiary. All funds contributed to the account are controlled by the account owner.
Still have questions, visit our FAQ page for additional information.
Bright Directions Features
Tomorrow’s opportunities come from saving today. That’s why you’re setting money aside for higher education in the years to come. And with an investment in Bright Directions, you can enjoy several additional benefits today: tax advantages, flexibility, competitive plan costs, and investment options from quality fund families.Learn More about Bright Directions Features
When you invest with the Bright Directions College Savings Program, you have the potential to benefit from multiple tax advantages that could help you accumulate more dollars for college. For additional information, visit our tax center and consult with your tax professional.
Each year, Illinois taxpayers can deduct contributions made to Illinois 529 plans up to:1
- $10,000 per individual taxpayer
- $20,000 for a married couple filing jointly
The increasing importance of a college education is matched by increasing costs. A sizable sum will be needed to finance this long-term investment. Learn how much you’ll need and when to start saving so you’re prepared to meet your savings goals.Learn More about College Costs
College Savings Calculator
Create your own college savings report with our free college savings estimator and see the total projected cost and estimated monthly savings amount you’ll need when saving for college. Then, work with your financial advisor to familiarize yourself with our different investment approaches and select the one that’s right for you.
* Amount assumes an actual investment return of 6% with monthly contribution on the first day of each month. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular college savings plan or in Bright Directions Plan or any taxes payable upon withdrawal.