Washington D.C. College Savings Plan Options

May 24, 2017 | College Planning and Finances

DC school bus

(Updated May 14, 2021)

Washington D.C. residents have long been underserved and underrepresented. While we don’t have any updates on representation, we do have good news about college saving options for DC residents, and associated tax benefits.

In 2017, Washington D.C.’s College 529 Plan was revamped to add stronger investment choices and reduce fees. This is a great saving recipe if you’re a D.C. resident saving for college and seeking to gain D.C. income tax deductions, too.


DC 529 College Savings Investment Choices

The new plan offers three different types of investment options:

Year of College Enrollment Portfolios

Various portfolios are offered, containing appropriate investment positioning based upon the anticipated year a child will enter college. The portfolios are more aggressive for younger children, and become more conservative as children near age 18 and head off to college.

Individual Portfolios

Accountholders can also create custom investment portfolios, utilizing a mixture of index and actively managed funds, including socially responsible choices. There are eight single-strategy portfolios in total:

  • U.S. Intermediate-Term Bond Index Portfolio
  • Intermediate-Term Bond Portfolio
  • U.S. Total Stock Market Index Portfolio
  • U.S. Socially Responsible Equity Portfolio
  • U.S. Large Cap Equity Portfolio
  • Non-U.S. Total Stock Market Index Portfolio
  • U.S. Small Cap Equity Portfolio
  • Non-U.S. Socially Responsible Equity Portfolio

Principal Protected Portfolios

For those less inclined to invest, the new plan also offers an option akin to a savings account, with a modest interest rate, the Principal Protected Portfolio.

Lower Costs and Fees

The new plan is specifically designed to reduce fees. Depending on the investment options you select, the annual fees based upon the assets held in the plan will range from 0.15% to 0.74%. (For example, if you invest $1,000, your annual asset-based fee could range from $1.50 to $7.40.)  The plan also charges an annual account maintenance fee of $10 for D.C. residents and $15 for non-D.C. residents.

Washington, D.C. Tax Incentives

While the DC Section 529 plan’s investment options are improving, and its fees are decreasing, associated tax advantages remain the same. Nonetheless, they still offer an extra investment incentive which, remember, isn’t limited to parents only; grandparents and others can establish and contribute to a 529 plan for a cherished child.

As a recap, each taxpayer can deduct up to $4,000 per year, regardless of the number of beneficiaries. Married couples filing jointly can deduct up to $8,000 (if each taxpayer owns an account). Payments in excess of $4,000 per taxpayer can be deducted from D.C. income in future years, for up to 5 years.

SageVest Wealth Management is committed to helping you and your family plan for important life events, and saving for college is often top of the list. We can help you evaluate your college savings options, thereby supporting your goals for the next generation’s future as part of your broader wealth management objectives. Please contact us for more information if you’re interested in supporting your child, grandchild, niece, nephew or other family member’s academic success.

Prepared by SageVest Wealth Management. Copyright .
Standard Disclosure

The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This article is for informational purposes only. The views expressed are those of SageVest Wealth Management and should not be construed as investment advice. All expressions of opinions are subject to change and past performance is no guarantee of future results. SageVest Wealth Management does not render legal, tax, or accounting services. Accordingly, you, your attorneys and your accountants are ultimately responsible for determining the legal, tax and accounting consequences of any suggestions offered herein.

In accordance with IRS CIRCULAR 230, we inform you that any U.S. Federal tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used by a taxpayer, for the purpose of (a) avoiding penalties under the Internal Revenue Code or that may otherwise be imposed on the taxpayer by any government taxing authority or agency, or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The provision of a link to any third party website does not mean that SageVest endorses that website. If you visit any website via a link provided here, you do so at your own risk and indemnify SageVest from any loss or damage incurred.


How Secure is Your Family's Future?

Focus on your family’s financial best interests with SageVest Wealth.

For more ideas, check out the following SageVest Kids blog articles:

Get financial tips delivered to your inbox.

Make a wise investment in your FAMILY'S future today.

SageVest Wealth Management is a fee-only firm, proudly serving as a fiduciary.