Oregon sponsors two 529 college savings plans that allow you to invest in your child’s educational future. Its direct-sold option allows you to begin investing with a minimum deposit of $25. Its advisor-sold choice, the MFS 529 Savings Plan, has a minimum initial deposit of $250. Both plans offer distinct tax benefits and Oregonians can make tax deductible contributions. You can also find a financial advisor to make the most out of your savings and create a smart strategy to meet your needs. Oregon has low fees compared to other states but only a middle-of-the-road maximum contribution and limited investment versatility.
|Plan Name||Program Type||How to Enroll||Fees|
|Oregon College Savings Plan Read Review||College Savings Plan||Direct-Sold||0.30% - 0.70%|
|MFS 529 Savings Plan Read Review||College Savings Plan||Advisor-Sold||0.71% - 2.04%|
Oregon College Savings Plan
The Oregon College Savings Plan allows U.S. citizens to invest in their children's educational future by starting out with as little as $25. Afterward, they can contribute up to $310,00. While the plan offers several tax benefits to all U.S. citizens, tax payers from the Beaver State get to make tax deductible contributions up to certain annual limits. In addition, your child can use your savings in unison with financial aid and scholarships to slash the real price of college even more.
How Do I Enroll in The Oregon 529 Plan?
Any U.S. citizen or resident alien with a valid Social Security number or tax identification number who is at least 18 years old can open an account. You can enroll in the Oregon College Savings Plan online. Or you can download enrollment materials or request that an enrollment kit be mailed to you.
You’ll need Social Security or tax identification numbers for yourself and your beneficiary as well as contact information for each. If you’re opening an account online, you’ll need your bank account or savings account numbers and bank’s routing number to make a minimum opening contribution of $25. Or, you can open one with $15 if you set up a per-pay-period payroll deduction program. You’d also need to choose your investment option at enrollment.
How Much Does the Oregon College Savings Plan Cost?
With the exception of the guaranteed portfolio option which carries no fees, Oregon’s 529 college savings plan charges a total annual asset-based fee which varies depending on which portfolio you invest in. That fee factors in underlying fund expenses as well as a plan administration fee. It’s not charged out of your pocket but rather factored out of your account balance each year. The total annual asset-based fees for portfolios in the plan currently range from 0.30% to 0.70%.
Tax Benefits of the Oregon 529 Plan?
The Oregon College Savings Plan offers several exclusive benefits for Beaver State residents. Oregon taxpayers can deduct contributions from their state-based taxable income up to annual limits that are indexed for inflation. For the 2018 tax year, that limit is $2,375 for single filers and $4,750 for married couples filing jointly. Oregonians have until April 15, 2019 to contribute toward their state’s 529 plan to take advantage of tax deductions for 2018. And unlike several other state’s plans, rollovers or transfers from 529 plans sponsored by other states count as new contributions. This means they add to your tax deductible contributions up to the applicable limit.
But you'll run into trouble when you make a nonqualified withdrawal, which happens when you take money out of your 529 plan to cover something other than a qualified higher education expense. These distributions will be subject to federal income tax as well as a 10% penalty unless you meet certain circumstances. You may also have to pay back previously claimed deductions related to your 529 plan contributions.
You should seek a local tax accountant to discuss this topic in detail. An advisor can also tell you about the specifics of nonqualified withdrawals and how those may affect you.
What Are My Investment Options?
Oregon’s direct-sold 529 plan offers several portfolio options designed for various risk profiles and levels of investment knowledge. Its age-based portfolios may be appropriate for the account holder who is not familiar with the investment world and wants the portfolio to do the work for them. These portfolios automatically rebalance their asset-allocation, the mix of stock funds, bond funds and other securities, over time. When your child is young, the portfolio will aim for strong returns by investing heavily in stock funds, which are generally riskier but have the biggest potential for growth. As your child gets closer to the college years, the portfolio will shift focus to safer investments like fixed-income and money market funds.
If you have a clearer picture of what you want your investment mix to look like, you may be attracted to the plan’s multi-fund portfolios. The asset-allocations for these portfolios are based on different risk profiles and objectives so you can customize your plan. The mix is designed to stay constant over time. You can also invest in single-fund portfolios. These portfolios divert your money entreley to one underlying mutual fund and performance will rely solely on that fund.
But if you’ve been saving for sometime and are looking to protect what you’ve earned, you may be interested in switching to a guaranteed option. This portfolio’s objective is to protect your earnings while still generating a steady return on your investments.
How Do I Withdraw Money from the Oregon College Savings Plan?
You can request a withdrawal online, by phone or through the mail. The payment can be sent to you, your beneficiary or the educational institution you’re funding. However, only the account holder can request a withdrawal. Also, make sure you keep all receipts to distinguish qualified expenses for tax purposes.
With the guidance of a financial advisor, you can invest in the advisor-sold MFS 529 college savings plan, which is also sponsored by the state of Oregon. It has an opening balance of $250 and, like the direct-sold plan, allows for a maximum contribution of $305,000. Though it has higher fees than the direct-sold plan, this advisor-sold option will appeal to an investor who wants the guidance of a trusted professional.
How Do I Enroll in Oregon’s Advisor-Sold College Savings Plan
You can find a local financial advisor who will guide you through the enrollment process as well as investment selection process. Before working with one, however, ask your advisor questions—especially about their compensation structures. Your fees can vary widely among different advisors.
How Much Does Oregon’s MFS College Savings Plan Cost?
The MFS 529 Plan sponsored by Oregon state is an advisor-sold plan. These work a bit differently from their direct-sold counterpart. For starters, these are offered through financial advisors who guide you through the process. Of course, this comes at a price. You’ll see fees that aren’t typical to direct-sold options such as sales charges and a variety of administrative fees factored out of your account balance.
The MFS plan’s fee structure can be broken down into fee structure and ongoing expenses. Each portfolio charges a total annual asset-based fee (ongoing expenses) depending on share class. Overall, this fee ranges from 0.71% to 2.04%.
In addition, you may face a type of sales charge depending on the share class you invest in. If you invest in share class A units, for example, you can face a maximum sales charge of 5.75%. This is taken from your contributions. If you invest in share class B or share class C, you won’t get a sales charge. But you might face a contingent deferred sales charge (CDSC). These are usually levied if the shares are redeemed within a certain period of time after purchase. The maximum CDSC is 4%, triggered when you redeem within a year.
The plan also charges a $25 account maintenance fee. As you can tell, investing in this plan can get quite complicated. So make sure you’re working with your advisor to choose the investment option and fee structure that's suitable for you.
Tax Benefits of Oregon’s Advisor Sold Plan
The MFS 529 Plan sponsored by the state of Oregon enjoys the same tax benefits as its direct-sold counterpart. That includes tax-deferred growth on contributions as well as tax-free withdrawals when they’re used for qualified higher-education expenses.
But remember, nonqualified withdrawals would be subject to same penalties.
What Are My Investment Options?
With the guidance of a financial advisor, you can build an investment strategy based on your unique risk profile and savings goals. The plan offers a variety of investment options. You can build an investment option from one or more individual portfolios. Each is based on different risk profiles and offers exposure to different asset classes ranging from conservative investments like fixed-income and money market funds to more aggressive options like U.S. and international stock funds.
In addition, you can invest in age-based portfolios that automatically change their asset mix to become more conservative as your child gets closer to the college years.
How Do I Withdraw Money from the MFS 529 College Savings Plan?
You can reach out to your financial advisor or visit your online account to request a withdrawal. Before you make one, however, you should consult your advisor in order to do it properly without unwittingly triggering a nonqualified withdrawal and resulting tax penalty. If you're not sure how to seek a professional to work with, you can use our SmartAdvisor tool. It asks you some simple questions in order to link you with local advisors based on your preferences and savings goals such as saving for your children's college education.