Kansas updates 529 education plan investment options, changes plan manager
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What are Kansas 529 plans and how do they help families save for education?
Hi, this is Morgan Chilson with the Kansas Reflector, and I'm here with Steven Johnson, the Kansas State Treasurer. We'll be talking today about changes to the state's 529 plans, which are those terrific investment plans that allow parents, grandparents, other people who love kids to save money for a child's college education. These plans are used by more than 228,000 families and have $14.5 billion in assets under management. Welcome to the Reflector Podcast, Mr. Johnson. Thanks for being here.
Great to get to be with you.
Well, I appreciate you taking the time out. Um maybe we can get started by just explaining to folks exactly what the 529 plans are and what those encompass.
That's a great question. It's a great tool. So it provides the opportunity to save for education a variety of uh forms. It could be college education, it could be technical school, it could be an apprenticeship, a variety of things that I might save for future education. And one of the benefits is the growth is tax deferred, and if I use the funds in the future. For the intended education purpose, it actually comes out tax-free. So you get the additional value of compounding the government share of those returns inside that plan and to put towards the education. In addition, you get a tax deduction in Kansas of up to $3,000 per person per beneficiary that you take off your state income tax. So there are a variety
of tax benefits that just help with that challenge of saving for education.
And education has certainly gotten a little bit more expensive these days. I'm old enough when I remember you could work a second job and pay your way through, and that is definitely not the case now. So I did give throw out some numbers there in terms of participation, but do we get pretty good participation in Kansas on these plans?
So I think we could get better participation that is there and w part of our job is to make sure we get that word out. So thank you for the chance to get that in front of people, to remind them that it is there. And in particular, um we have counties that we don't have any account owners and we want to just make sure that the word is there and people know that the tool is available so that they can make use of it as we go forward. Uh if we look at the number of students who would be looking towards education in the future, we could have even more accounts than that. Our account number is a little higher than many states. our size because we happen to get to partner with the Schwab investment company.
Their plan is a part of our plan and many of our accounts and uh assets are through the Schwab Company.
Okay, well that makes a lot of sense. Is it something that I always wonder if people are hesitant because of the investment side of it? Sometimes I know as a longtime business reporter, investments can be really confusing. Is this something that just anyone can get online and sign up basically and get going?
It really is. If you have the social security number of the beneficiary that you want to plan for you can sail right through. I set one up, I think it maybe took me 10 minutes on my phone to work through. And if you don't know that social security number, but it's someone in your family, you can change beneficiaries up and down the family line. So I could put my own social security number in, start saving, change it to a child, change it to another child, eventually change it to their children. So there's a lot of flexibility that can work through that. But the goal is to make it easy. You mentioned the investment side and that is one. So our biggest challenge is just making sure people know how to use it.
And to take the time to sit down and actually set it up. And every year you can save and have those earnings compound, make a big difference in the eventual goal. Um, but when people are in the process, the place where we see them quit the most often is that investment selection. It's like, oh, I don't know what I want to do. So going forward, um, there will be a default where Where you can just say, Well, just let the treasurer's office and the plan manager manage that.
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Chapters
5 chapters
1
What are Kansas 529 plans and how do they help families save for education?
0:00–5:44
2
Why does Kansas want more families to participate in the 529 program?
5:44–11:35
3
How is the new 529 plan manager being chosen and who will run the program?
11:35–18:27
4
What investment options will be offered and how does the new default portfolio work?
18:27–25:21
5
How low are the fees on Kansas 529 accounts and how are they reflected for investors?
25:21–27:15
Speakers
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