New survey finds majority who work with an advisor are saving for college and are more likely to contribute to their 529 plan now versus a year ago
What do your children and grandchildren want to be when they grow up? This holiday season, consider making a down payment on those dreams with a gift that lasts a lifetime – a contribution to a 529 college savings plan. Knowing that parents and grandparents want to make their young loved ones happy now and in the future, SMART529 offers gift ideas that encourage children's career aspirations in a way they can relate to right now and that can help them down the road.
In October 2009, The Hartford conducted an online survey of 520 parents and grandparents who work with a financial advisor. SMART529's "When I Grow Up" campaign is based on this research, which found a majority of parents and grandparents are ready to save for their little ones' college costs. Eighty-four percent of parents and grandparents are more likely to contribute to a 529 plan now than they were at this time last year, according to The Hartford's college saving survey. And, despite the recent market downturn, nearly two-thirds of college savers stayed on track and continued to contribute money to a 529 plan on a regular basis.
The survey also found that 80 percent of parents and grandparents have started saving for college for their children and grandchildren and the majority – 60 percent – is using a 529 college savings plan to save for higher education. A white paper with additional information about the survey results is available at www.hartfordinvestor.com.
"For parents and grandparents already saving, why not make an extra contribution as a holiday gift?" says Jeff Coghan, director of 529 plans at The Hartford. "We suggest giving children a fun item that they want today, along with a gift that gets them thinking about college and their future. Other family members and close friends may also appreciate this gift idea as well."
Ideas for Gifts of a Lifetime
Nearly all of parents and grandparents surveyed agree that it's important to have started saving for college by a child's early grade school years. Coghan suggests parents and grandparents begin their college savings when a child is a newborn. But, especially in their early years, most children do not appreciate or understand the gift of college. Coghan suggests that gift givers pair the 529 plan with a gift that supports the child's career goal, talents or hobbies. For example, if a child wants to be an artist or is creative, pair the monetary gift with painting and drawing supplies, he says. Or, give an aspiring astronaut a toy rocket ship or the hopeful architect a building block set.
"Parents and grandparents get great joy from watching their kids and grandkids open presents," says Coghan. "We want to pair that with a college savings gift that will be important down the road. A toy is fun today, but a college education will always be a priority, and more and more families are realizing that."
Visit www.hartfordinvestor.com for more gift-giving ideas and to download a SMART529 gift certificate that can be presented along with the other gift that encourages their dreams.
Benefits for the Gift-Giver
The holiday season is a great time for 529 investing because contributors can take advantage of the tax benefits before year-end1. Earnings accumulate federal-tax deferred and withdrawals for qualified higher education expenses – including tuition, fees, room, board, books, equipment and supplies – are federal income-tax-free and may be free from state income taxes. As of 2009, a lump sum of up to $65,000 ($130,000 for married couples) may be contributed once per five-year period without a federal gift tax2.
Parents and grandparents surveyed by The Hartford named tax benefits among the top reasons they chose a 529 plan to help them save for their children's college education.
| Withdrawals for qualified education expenses are exempt from federal taxes | Â | Â | Â | Â | 68 percent |
| Deposits to an in-state plan provide state income tax deduction | Â | Â | Â | Â | 43 percent |
| Students can use plan funds to attend any accredited college or technical college in the U.S. or internationally | Â | Â | Â | Â | 64 percent |
| If the child decides not to attend college, or finished without
using all of the funds, the plan can be transferred to another family member | Â | Â | Â | Â | 47 percent |
| Investments can be made automatically | Â | Â | Â | Â | 40 percent |
A white paper with additional information about the results of The Hartford's 2009 college savings survey is available at www.hartfordinvestor.com. The survey covers the impact of the financial advisor, how college savers approach new IRS rules about changing investment strategies and positive trends that have emerged since 2007.
Also, visit Hartford Investor to view the SMART Steps to College Savings guide.
About The Hartford
Celebrating nearly 200 years, The Hartford (NYSE: HIG) is an insurance-based financial services company that serves households, businesses and employees by helping to protect their assets and income from risks, and by managing wealth and retirement needs. A Fortune 500 company, The Hartford is recognized widely for its service expertise and as one of the world's most ethical companies. More information on the company and its financial performance is available at www.thehartford.com.
HIG-L
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2008 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
1 Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.
2 If the donor elects to treat a gift as being made over five years, and the donor dies before the end of the five year period, the portion of the gift allocatable to the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Any additional gifts given to the same Designated Beneficiary in the five year period will be subject to federal gift tax. Consult with your tax advisor for more information.
SMART529 is offered by the West Virginia College Prepaid Tuition and Savings Program Board of Trustees and is administered by Hartford Life Insurance Company.
You should carefully consider the investment objectives, risks, charges and expenses of SMART529 and its Underlying Funds before investing. This and other information can be found in the Offering Statement for SMART529 and the prospectuses or other disclosure documents for the Underlying Funds, which can be obtained on SMART529.com or by calling 866-574-3542. Please read them carefully before you invest or send money. SMART529 is distributed by Hartford Securities Distribution Company, Inc. Member SIPC.
If you reside in or have taxable income in a state other than West Virginia, you should consider whether your state has a qualified tuition program that offers favorable state income tax or other benefits exclusive to your state's program that are not available under the SMART529 program.
Investments in SMART529 are not guaranteed or insured by the State of West Virginia, the Board of Trustees of the West Virginia College Prepaid Tuition and Savings Program, the West Virginia State Treasurer's Office, Hartford Life Insurance Company, The Hartford Financial Services Group, Inc., the investment sub-advisors for the Underlying Funds or any depository institution and are subject to investment risks, including the loss of the principal amount invested, and may not be appropriate for all investors.
This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.
"The Hartford" is a registered trademark of Hartford Fire Insurance Company.
"SMART529" is a registered trademark of the West Virginia College Prepaid Tuition and Savings Program Board of Trustees.
Contacts:
The Hartford
Julia Zweig, 860-843-6022
julia.zweig@hartfordlife.com
or
Robert
DeMallie, 860-843-5215
robert.demallie@hartfordlife.com
