By Edward Jones

National Grandparents Day is ob- served on Sept. 9. If you’re a grand- parent, you may get some gifts or cards – or maybe even a phone call! But you might feel that it’s better to give than to receive, especially when it comes to your grandchildren. And you can make a real difference in their lives by making a financial gift for their future. For starters, think about your grand- children’s education. If college or some type of vocational school is in their future, you may want to help them meet some of the costs, which can be considerable. One common education-savings vehicle is a 529 savings plan. With this plan, earnings on withdrawals are tax free, provided they are used for qualified education expenses. (Keep in mind that 529 savings plan distri- butions not used for qualified expenses may be subject to ordinary income tax and a 10% IRS penalty on the earnings.) You also may be eligible for a state income tax incentive for contributing to a 529 savings plan. Check with your tax advisor about these incentives, as well as all tax-related issues pertaining to 529 savings plans. A 529 savings plan’s contribution limits are quite generous. And, as the owner of a 529 plan, you have flexibility in choosing where the money goes – if your grandchild decides against college or another type of advanced education, you can transfer the plan to another beneficiary. And due to recent tax law changes, the scope of 529 plans has been expanded to include qualified withdrawals of up to $10,000 for tuition expenses per year per beneficiary at public, private or religious elementary or secondary schools. Be aware, though, that a 529 savings plan could affect any financial assistance your grandchild might receive.

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