What’s the best way to save for college?

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When it comes to saving money for college, there are many options available—each with their own set of benefits. The best option for you depends on multiple factors, like your savings goals, risk tolerance and investment preferences.

Bright Start 529 may check all the right boxes

529 plans are one of the most popular ways families choose to save for college. Other common methods include Roth IRAs or a standard bank savings account.*

Bright Start 529 Bright Start 529 logo

1
  • yes checkmark Can reduce your Illinois state taxable income up to $20,000 if married filing jointly4
  • yes checkmark Tax-deferred growth
  • yes checkmark Tax-free withdrawals for qualified education expenses
  • yes checkmark Investment options
  • yes checkmark No income restrictions
  • yes checkmark No age restrictions for withdrawals
  • yes checkmark High annual contribution limits

Roth IRA2

  • no x No state tax deductions
  • yes checkmark Tax-deferred growth
  • potential question mark Potential Tax-free withdrawals**
  • yes checkmark Investment options
  • no x Income restrictions
  • no x Age restrictions for withdrawals
  • no x Lower contribution limits

Bank Savings Account3

  • no x No state tax deductions
  • no x No tax-deferred growth
  • no x No tax-free withdrawals
  • no x No investment options
  • yes checkmark No income restrictions
  • yes checkmark No age restrictions for withdrawals
  • yes checkmark High annual contribution limits

Moreover, money saved in a 529 does not disqualify students for financial aid. 529 assets are typically treated as belonging to the parent (or grandparent, etc.) and count less in Expected Family Contribution (EFC) calculations than assets held in the child’s name.

Learn more at https://studentaid.gov/ or check with the schools you are considering.

  1. *Read about material differences between Bright Start 529, Roth IRAs and bank savings accounts. This material does not take into account any specific objectives or circumstances of any particular investor or suggest any specific course of action. Be sure to consult your legal or tax professional for tax advice.↩
  2. **No tax-free distributions for education expenses unless account owner is age 59 ½ or older and account has been established for five years.↩

Why choose Bright Start 529

  • Bright Start 529 offers a tax deduction to Illinois taxpayers—up to $20,000 for joint filers or $10,000 for single filers.4
  • With Bright Start 529, any growth you see over time won’t be subject to taxes down the line if used for qualified higher education expenses.
  • Bright Start 529 savings do not disqualify students from financial aid and count less in EFC than assets held in the child’s name.5

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