A Holiday Gift That’s Also an Investment in the Future

Superintendent News & Views

A Holiday Gift That’s Also an Investment in the Future

By David Hill, North Tama Superintendent

I have a possible solution to your gift-giving dilemmas this holiday season, especially if you are connected to anyone under age 18 and would like to make an investment in their future. Instead of trying to figure out what is on the “wish list” of the special young person in your life, you can give one of the most meaningful gifts a child may ever receive. You can even earn yourself a state tax deduction in the process.  I’m talking about opening or contributing to a College Savings Iowa account. 

A contribution to a College Savings Iowa account is a great present for Christmas, birthdays, or other nearly any other special occasion.  It will show the child in your life that you value education and that you want to invest in their future.  Whether they are a toddler, a preschool student, in grade school, or in high school, a contribution to their College Savings Iowa account is a great way to show how much you care. Even if the special young person in your life is getting very close to their college years, it’s never too late to start planning for the future.

 Opening a College Savings Iowa account has two-fold benefits. Not only are you helping a young person prepare for his or her future education, but you can take advantage of the tax benefits as well.

College Savings Iowa lets anyone — parents, grandparents, friends, and relatives — contribute towards college costs on behalf of a future scholar of any age.  Iowa taxpayers contributing to College Savings Iowa can deduct up to $3,239 per account from their state taxable income in 2017.

Contributions and earnings grow free of federal and state income taxes while invested. They remain tax-free when they are used to pay for qualified higher education expenses.

Administered the office of Iowa’s State Treasurer, College Savings Iowa allows multiple investment options, including options that take into account the child's age and the account owner's tolerance for risk. As a general rule, age-based accounts opened for younger beneficiaries are invested in stocks early on; these accounts try to maximize returns by taking advantage of the longer time horizon. As the beneficiary nears college age, the assets are automatically shifted to more conservative portfolios. This allows you to protect your capital and reduce the market risk before you begin making withdrawals for college expenses.

It takes just $25 and 10 minutes to open an account online. Investors can withdraw their investment tax-free to pay for qualified higher education expenses, which include tuition, books, supplies and room and board at any eligible college, university, community college or accredited technical training school in the United States or abroad. While participants do not need to be an Iowa resident to invest in the plan, they do need to be an Iowa taxpayer to take advantage of the Iowa income tax deduction.

For more information about College Savings Iowa, call (888) 672-9116 or visit CollegeSavingslowa.com.

I encourage your feedback on this column, along with any questions you may have. These SUPERINTENDENT NEWS & VIEWS columns, in addition to my blog and Twitter postings, are part of my plan for open communication with the community as a part-time superintendent with duties in another area school district. If you’ve missed any of my columns or would like to re-read or share them with your friends and family, you are welcome to visit my blog at http://redhawksupt.blogspot.com/ where they are all posted. You are also welcome to follow me on Twitter (@DavidRobertHill) where I will occasionally post updates or other information not found on the blog.