College Savings Programs for Military Families
By on May 20, 2009
Legislation over the past ten years has brought about numerous savings and funding opportunities for members of the military and their families. These options, along with other programs already available, have made the daunting task of saving for college much more attainable for our military members.
The Military Officers Association of America (MOAA) is the nation’s largest and most influential association of military officers. It is an independent, nonprofit, politically nonpartisan organization. Through MOAA’s website (www.moaa.org) you will be able to find information on the vast offerings of their services and benefits. One such area of assistance is with college savings and funding resources.
The Vanguard 529 College Savings Plan
For starters, MOAA provides servicemembers a flexible, competitive, and tax-advantaged college savings option by partnering with The Vanguard Group to offer The Vanguard® 529 College Savings Plan. In this plan, Vanguard will waive the $3,000 minimum investment fee, so you can get started with as little as $50. The plan offers identical benefits as all other state-sponsored 529 plans explained earlier. Account owners will have the same investment options available to them as well as the same tax benefits offered by 529 plans.
On November 11, 2003, President George Bush signed the Military Family Tax Relief Act of 2003 (HR 3365). Among other items, the Act provides that attendance at a U.S. military academy will be treated as a scholarship for purposes of the 10% penalty on nonqualified withdrawals from a 529 plan or Coverdell ESA. The value of the no-cost education (as determined under the U.S. military code) can be withdrawn penalty-free from a 529 plan or CESA, although the earnings portion will continue to be taxable.
