{"id":7978,"date":"2024-11-16T00:45:50","date_gmt":"2024-11-16T00:45:50","guid":{"rendered":"https:\/\/finderica.com\/millions-of-children-have-unclaimed-college-savings-money\/"},"modified":"2024-11-16T00:45:50","modified_gmt":"2024-11-16T00:45:50","slug":"millions-of-children-have-unclaimed-college-savings-money","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=7978","title":{"rendered":"Millions Of Children Have Unclaimed College Savings Money"},"content":{"rendered":"\n
\n
<\/p>\n

LAGUNA NIGUEL, CA – August 20: Third-grade teacher Hope Manuel talks with students on the first day … [+]<\/span> of class at Moulton Elementary School in Laguna Niguel, CA on Tuesday, August 20, 2024. (Photo by Paul Bersebach\/MediaNews Group\/Orange County Register via Getty Images)<\/span><\/p>\n

<\/fbs-accordion>MediaNews Group via Getty Images<\/small><\/figcaption><\/figure>\n

529 plans are a great way to save for college. And over the last decade several states have started programs to several states automatically open and fund 529 college savings plans for newborn children.<\/p>\n

Unfortunately, reports are showing that millions of families who have these accounts don’t even know about them – leaving unclaimed college savings money.<\/p>\n

The benefits of these accounts can’t be overstated, even if you can only save a small amount of money each month or money a child receives for holidays or their birthday over the years.<\/p>\n

A recent report from national nonprofit Commonwealth<\/a> “How Employers Can Help Workers Save for Their Child\u2019s Education Through 529 College Savings Plans<\/em>,” showed that having a 529 plan for a child with even a small amount of savings increases their likelihood of attending college.<\/p>\n

The report also showed that 529 plans are underutilized by low- and moderate-income families due to lack of awareness. For example, 73% of families who participated in Commonwealth\u2019s national survey who didn’t have a 529 plan had never heard of it.<\/p>\n

<\/fbs-ad><\/p>\n

Millions Of Kids Already Have College Savings<\/h2>\n

When it comes to college savings programs for newborns, California stands out with its California Kids Investment and Development Savings Program (CalKIDS<\/a>) program. According to nonpartisan and nonprofit news organization CalMatters, nearly 3.7 California students and 667,000 newborn children in the state have money in the program.<\/p>\n

How much do California children have? This depends in part on when they were born. This program was set up so children born between July 1, 2023 and June 30, 2023 received $25 in their accounts, while those born after July 1, 2023 received (or will receive) $100 deposits.<\/p>\n

On top of that, all low-income first graders receive a one-time cash infusion of $500, and first graders in foster care or experiencing homelessness get another $500 (or another $1,000 if they meet both criteria). The state of California also provided a one-time deposit to all low-income students in grades 1 through 12 in its 2023-22 budget. CalMatters points out that all the money in the accounts is offered on a tax-free basis, and the funds are invested on behalf of the student as well.<\/p>\n

This is all wonderful news for California students, yet CalMatters reports that only 313,445 out of 4.3 million student accounts created have been claimed by families<\/strong>. Further, only 6.3% of newborn accounts and 7.4% of student accounts had been claimed as of March 2024.<\/p>\n

California isn’t the only state with this type of program, yet it’s one of the only programs that automatically saves for children without families initiating the process. Other states that automatically open 529 plans for children include New York and Pennsylvania. Pennsylvania is another state where students likely have money they don’t know about since its Keystone Scholars program<\/a> automatically deposits $100 into a college savings account for all children born to state residents (including adopted children) in 2019 or after.<\/p>\n

Meanwhile, other states that have college savings programs for kids (like Connecticut, Colorado, Kansas, North Dakota, and others) offer matching funds when families put money into an account first.<\/p>\n

How To Find Out If You Have Unclaimed College Savings Money<\/h2>\n

If you live in a state that automatically deposits money into a 529 savings account for children, financial advisor Kristen Beckstead of First Horizon Advisors<\/a> says you should try to access information about your state’s program via the state treasurer\u2019s website or the state\u2019s 529 plan website. However, you’ll need to remember to look in the state where a child was born or adopted, not the state the child currently resides in.<\/p>\n

If you can’t seem to figure out where to find this information online, you can also call your state treasurer or state 529 plan administrator.<\/p>\n

Should You Use a 529 Savings Plan?<\/h2>\n

If your state has already opened a 529 savings plan for you, you should consider using it for college whether they added money to the account or not. Beckstead says 529 plans are meant to help ease the burden of paying for higher education with tax advantages and increased flexibility, including the option to move unused 529 plan money to a Roth IRA for the beneficiary if certain conditions are met. Not only that, but money deposited into a 529 savings plan gets to grow tax-free until it’s used for eligible higher education expenses, at which point money can be utilized without any tax consequences.<\/p>\n

Some states also offer tax credits or deductions for funds parents deposit into a 529 plan<\/a>. In the state of Indiana, for example, residents get a 20% tax credit (up to $1,500 annually) on up to $7,500 deposited into a 529 plan each year.<\/p>\n

There are also states that match funds put into a 529 plan. This means you depositing a certain amount will result in the state putting more money into the account.<\/p>\n

An example of this is the state of Kansas, which offers matching funds through its LearningQuest program<\/a>. Specifically, the LearningQuest KIDS Matching Grant Program matches up to $600 in funds put in an eligible 529 plan in the state of 2024. However, income limits for participants apply, and at least $100 has to be deposited to receive any matching funds.<\/p>\n

In Nevada, on the other hand, the Silver State Matching Grant matches up to $300 deposited into an eligible 529 plan for five years for a maximum of $1,500 per beneficiary.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

LAGUNA NIGUEL, CA – August 20: Third-grade teacher Hope Manuel talks with students on the first day … [+] of class at Moulton Elementary School in Laguna Niguel, CA on Tuesday, August 20, 2024. (Photo by Paul Bersebach\/MediaNews Group\/Orange County Register via Getty Images) MediaNews Group via Getty Images 529 plans are a great way<\/p>\n","protected":false},"author":1,"featured_media":7979,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[1313,436,1659,104,327,2592],"class_list":{"0":"post-7978","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-children","9":"tag-college","10":"tag-millions","11":"tag-money","12":"tag-savings","13":"tag-unclaimed"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/7978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7978"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/7978\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/7979"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}