Kentucky 529 Plan And College Savings Options
Kentucky has a 529 plan called KY Saves 529 that can help you save for college. Kentucky also has a 529 Able Plan as well.
If you live in Kentucky, these might be good options for you to save for college.
These programs are designed to help make college more affordable - so that you can get the education you need. By saving for college early on, you can make paying for college easier down the road.
If you're not quite sure how 529 plans work, check out this starter guide to What Is a 529 Plan?
There is also a specific order of operations to save for college that we recommend families follow. These programs are specific to the State of Kentucky. Each state has different rules when it comes to 529 plan savings.
Average Cost Of College In Kentucky
When saving for college in Kentucky, it's important to take into consideration the cost of attendance in the state. If you choose to go to an out-of-state school, you need to look at the average cost of attendance in that state.
There are 100 colleges and universities in the State of Kentucky.
The total average cost of college (Cost of Attendance) in Kentucky for in-state residents is $19,668 for 2020. This includes tuition, room and board, books and supplies, and other expenses.
For just tuition alone, the average undergraduate tuition for in-state residents is $6,136 for 2020. The cost of tuition in Kentucky has been rising at about 1.6% per year.
See how this compares to the average cost of college here. Keep in mind the average student loan debt by graduating class here.
Explore the data here.
Kentucky 529 Plan Tax Information
Tax savings is one of the big benefits of using a 529 plan to save for college. On a federal-level, there is no tax savings for contributions, but qualified distributions are tax-free.
Here are the special tax benefits and considerations for using a 529 plan in Kentucky.
Kentucky is one of the states that does NOT offer any tax benefits for 529 plan contributions.
Maximum: Accepts contributions until all account balances for the same beneficiary reach $350,000.
Rollovers into the state plan are allowed.
Outbound rollovers follow federal tax treatment.
Qualified distributions from a Kentucky and non-Kentucky 529 plan are tax-free.
Kentucky does conform with Federal law in regards to using a 529 plan for K-12 tuition. See this guide: Using a 529 Plan For Elementary and High School Private Education.
Kentucky does conform with Federal law for using a 529 plan for student loans.
Non-Qualified Distributions Taxes, Penalties, Recapture
A non-qualified withdrawal from an Kentucky 529 is subject to Kentucky state income tax on the earnings.
Kentucky 529 College Savings Plan Options
Kentucky has one 529 plan option - one consumer plan. They also have an old pre-paid tuition program that is no longer taking new enrollment.
KY Saves 529 Plan
The KY Saves 529 Plan is the name of Kentucky's 529 Plan. This plan offers a variety of investment options, including age-based portfolios that become more conservative as the child approaches college, and static investment fund options.
The funds offered include American Funds, BlackRock, DFA, Schwab, SSGA, and TIAA-CREF.
There is a program management fee of 0.20% to 0.40%.
The underlying funds all charge expense ratios from 0.02% to 0.38% depending on the investment option.
Who Should Use It:
We recommend that Kentucky savers use another plan, or a service such as College Backer to make 529 plan contributions easy.
We recommend that out-of-state residents utilize other plans.
Kentucky's Affordable Prepaid Tuition (KAPT)
Kentucky's Affordable Prepaid Tuition (KAPT) Program closed to new enrollment in 2004. However, existing contracts will still be honored.
Kentucky 529 Able Plan Options
529A Able accounts are accounts designed to help those with disabilities escape poverty and save for themselves. Learn more about 529A Able Plans here.
The STABLE Kentucky is a 529A plan open to all residents in Kentucky.
This plan allows contributions of up to $15,000 per year from all sources.
It does have a minimum initial contribution amount of $50 per account. The minimum subsequent contribution amount is $1.
The plan does have an account maintenance fee of $42 annually, assessed at $3.50 per month. It also has a program management fee of 0.19%.
You can open an STABLE Plan here.
Other Programs To Save For College
A 529 plan is one way to save for college. Remember, we have a full guide on our approach to college savings here - and it helps you find other options.
If you're looking for ways to boost your college savings, check this out:
CollegeBacker is one of our favorite ways to save for college because they make gifting for college so easy. You can setup an account, link your 529 plan (in most states), and get a unique URL that you can share with friends and family to save for your children's college.
Plus, they have Backer Bucks, which allow you to earn rewards and rebates for the shopping you already do - directly deposited into your children's 529 plan.
Upromise is another awesome tool to help you save for college because they have a lot of ways that you can earn money for your 529 plan. You can get rebates and rewards, and you can get cash back into your child's 529 plan by using the Upromise credit card.
Kentucky Financial Aid
Using a 529 plan isn't the only way to save money for college. Each state typically offers a variety of financial aid programs for their residents. These include scholarships and grants, and sometimes unique forgivable student loan opportunities.
Check out the list of Kentucky Student Loan and Financial Aid Programs.
Return to the full list of 529 Plans By State.