By Derek Dahlsad
A new program from the Bank of North Dakota gives a boost to saving for college for babies born in 2011. The Children FIRST program, announced to the public on May 18th, offers a $100 matching contribution for opening a new College SAVE account in the name of a North Dakota newborn and depositing $100 before the child’s fourth birthday.
Accounts can be opened by anybody, a friend, uncle, or grandparent, for the benefit of a child, and the minimum opening deposit is $25. Either the account holder or the child must be a North Dakota resident. Future contributions have a $25 minimum amount, but can be made many ways, from mailing a check to automatic withdrawals.
In addition, the Bank of North Dakota has other fund matching programs based on income. Depending on the account holder’s income and the age of the child, the Bank of North Dakota has additional contribution matches of up to $300 per year for three years.
College SAVE is the Bank of North Dakota’s 529 college savings plan, using UPromise Investments as plan manager and invested in Vanguard index-based portfolios. 529 savings plans are an education-specific investment savings account, like a 401(k) or an IRA, allowing people to save for a future expense with the advantage of potential gains from the investment portfolio. Also, like a retirement plan, contributions to the 529 plan are tax deductible up to $10,000 a year for married couples and $5,000 for single filers.
As with any investments, a 529 account can potentially lose value as the stock market ebbs and flows, but the Bank of North Dakota advises that short term fluctuations are unlikely to hurt a 529 account. “Over the long haul, the market has been very good in returning a subsequent good investment, especially when you’re dealing with College SAVE plans,” said James Barnhardt of the Bank of North Dakota, “We want people in these accounts more than a year, we want them in for a long time, in order to have the opportunity to put money as well as the opportunity as an investment and see it grow.”
The $100 and $300 matching contributions are funded by profits from the 529 plan received by the Bank of North Dakota for administering the plan. Those funds also go towards other education and savings programs offered by the Bank.
For more information and enrollment forms for both the Children FIRST or College SAVE programs, visit http://www.collegesave4u.com, or call 1-866-SAVE-529.
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