Another Reason to Have a Baby

Mar 7, 2011

Today, I’m making a list of the Top 5 Reasons to Have a Baby. Yes, I said it. Here are the Top 5 Reasons to Have a Baby!

Reason #5—Receive cash back by saving for college NOW! When you save for your child’s future college education costs through a 529 College Savings Plan, you can receive an Indiana state income tax credit. Okay, I probably lost a few people on this one since savings for a child’s education is not nearly as fun or flashy as Reasons #1 through #4, but bear with me.

College costs are a serious thing. According to, on average, tuition tends to increase about 8 percent per year. Put another way, that means the cost of college doubles every nine years! Do I have your attention, yet?

You have three ways of preparing for your child’s future college education costs:

  1. Ignore the information I’m about to give you and deal with the issue later. If this is your strategy, you’ll most likely use a large chunk of your investment assets to finance your child’s college education.

  2. Let your kids pay for college themselves, by taking out student loans. There’s nothing wrong with this option, but please don’t yell at them when they move back home after college. It can be difficult to “get started on their own” when they’re faced with a mountain of debt.

  3. Save for your child’s education NOW by contributing to an Indiana College Choice 529 account and receive a 20-percent RETURN! Yes, that’s right. The plan gives you back 20 percent of your annual contribution. Let me explain.

When you contribute to Indiana’s 529 Plan, you receive a 20-percent income tax credit, up to $1,000, on your state tax return. Sorry, non-Indiana residents, Hoosiers only. If you do not live in Indiana, please check your state’s plan. So, if you contribute $5,000 in 2011, you’ll receive the maximum tax credit of $1,000 (20 percent of $5,000). Any contribution amount less than $5,000 will result in a 20-percent credit, as well. For example, a $2,000 contribution will result in a $400 tax credit. Please note that I am using the word credit, not deduction. A tax credit is cash directly back into your pocket! A deduction is simply income that is not taxed. A credit is way better.

Please be aware, when you invest these 529 assets in the stock market, you may receive a positive or negative return. The Indiana state tax credit has nothing to do with an investment return. However, our state government’s generous income tax credit gives you 20-percent cash back on each year’s contribution. Isn’t Indiana the best?

If this generous incentive doesn’t get you excited, nothing will. Get started today at If you don’t have a baby yet, but want to get a head start on saving, you can open a 529 account and make yourself the beneficiary. That way, you can start contributing today, receive the tax credit and change the beneficiary to your child’s name once he or she is born.

I’m running out of writing space. Next time, I’ll list the other top four reasons to have a baby! Just kidding, everyone.

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