With the pace of higher-education costs rising faster than the general Consumer Price Index, it’s easy to understand why saving enough money to fund a child’s college education has become a financial challenge for many parents and grandparents.  So whether college for your child or grandchild is years away or right around the corner, put time on your side — consider the benefits of contributing to a 529 plan for a student in your family.
The student can use 529 plan account balances at any participating accredited postsecondary school in the

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United States or certain schools abroad for tuition, room and board, books, equipment, and supplies. Qualified expenses also include computer technology, related equipment and Internet-access costs.
As the owner, you retain control of the assets and can change beneficiaries within the designated student’s family at any time without penalty. A qualified family member generally includes siblings, descendants, ancestors, aunts, uncles and first cousins. Other key advantages of these plans include:
• Federal-income-tax-free qualified distributions. The student may be able to take qualified distributions federal-income-tax-free.
• No income limitations for participation. There is no income limit for contributing to a 529 plan, which is a benefit for higher-income families.
• Substantial contribution amounts.  A single person can contribute up to $65,000 in one year per beneficiary; a married couple can contribute up to $130,000 in one year per beneficiary with no gift-tax consequences. Such a contribution will be considered a five-year accelerated annual-exclusion gift, so no additional gifts can be made for that beneficiary for the next four years without incurring gift-tax implications unless the annual exclusion gift increases.
• Significant estate-planning benefits. The gift amount and subsequent appreciation, however, are removed from your taxable estate. (A portion of the contribution amount may be included in the donor’s taxable-estate calculation if the donor should die within the five-year period.)
Keep in mind that 529 plan investment balances may affect eligibility for financial aid:
• If a parent owns the 529 account, up to 5.64% of the value is included in Expected Family Contribution as a parental asset. Any 529 accounts owned by a dependent student, or by a custodian for the student, are reported on the Free Application for Federal Student Aid (FAFSA) as a parental asset. Any qualified withdrawals from these accounts are not included as income to the student.
• If a 529 account is owned by a grandparent (or someone other than a parent or the student), the value of the 529 plan is not reportable as an asset on the FAFSA.
However, any distributions from these third-party accounts are considered financial support to the student and are reportable on the following year’s FAFSA as student income. Student income is assessed at the student’s rate of 50%.
An investment in a 529 plan will fluctuate such that the shares when redeemed may be worth more or less than the original investment. There are no guarantees that an investment in a 529 plan will cover higher-education expenses. Investors should consult the plan’s offering document for the fees and expenses associated with that plan. You should consider a 529 plan’s investment objectives, risks, charges and expenses carefully before investing.
As Wells Fargo Advisors does not render tax advice, you should consult with a tax advisor before making any investment decisions which could have tax consequences. This article was written by Wells Fargo Advisors and provided courtesy of Katie C. Phifer CFP®, Financial Advisor at 843-524-1114. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE. Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo &amp; Company.