New College Savings Plan Available in Illinois

Illinois has introduced a new plan for college savings, called Bright Directions. It’s similar to the Bright Start 529 plan, but the funds are only available through brokers and invest­ment advisors.

Two aspects of this new program are particularly appealing. First, the quality of the available funds is better than in the old program. Many are rated 4 or 5 stars by Morningstar. Second, the annual expenses are low­er.

Mentor has agreed to participate in this program primarily as a service to our clients, although as a courtesy we will help others enroll for a nominal $100 fee. Although many brokers charge a commission, Mentor is a fee-only firm and receives no com­missions for any of the products we recommend.

529 Plans are a tax-sheltered way of saving for higher education costs, including tuition, fees, books, room and board. Investments grow tax-free and may qualify for a deduction on your Illinois state income tax. Qual­ified withdrawals are also free from state and federal income taxation.

Whether you are planning for a young child’s college or thinking of advancing your own education, this plan is worth considering.