New Tuition Track Option Available with Virginia529 Plans

Maura Schauss |

By Todd I. Youngdahl, CFP® and Ann D. Blakey, CFP®

Updated from 5/24/21

Time to review your Education Savings Strategy as we enter the 2021 - 2022 'Back to School' season.  Let's review a savings opportunity that could support your overall approach - Virginia529 Plan.

With tuition costs climbing year after year, saving for higher education may seem like a daunting task. Fortunately, Virginians have excellent options to save for college by using Virginia529 plans.  Recently, Virginia529 created a new option for saving - called the “Tuition Track” - which can remove some additional uncertainty from the process. 

Let’s look at the new Virginia529 “Tuition Track” option to see how it works.

Getting on Track with the Virginia529

The Tuition Track option within a Virginia529 plan is designed to take the guesswork and some of the hazards out of knowing how much to save for your child’s tuition cost. The annual cost of one year at a public four-year university in Virginia is assigned a value of 100 “units.” You purchase units by putting money into the Virginia529 plan. When your child is ready to go to college, if you spend 100 units toward a year’s education, it is worth 100 units at the current average.[1]

Example: Suppose that the average tuition cost for public, four-year universities in Virginia comes out to $15,000 per year in 2021. Each unit for that year would cost $150. If you purchased 25 units, that would cost you $3,750. If you did that for 16 years, you would have 400 units, enough for four years for one student at the average tuition cost for a Virginia public, four-year university.

Your total expense over 16 years would be $60,000. However, even if actual tuition costs have inflated to $18,000 per year, you still only have to pay the 100 units, even though you only paid $15,000 for them. The units have the same value at any school, anywhere in the country.

Please do keep in mind that annual tuition at a private or out-of-state school may require more units than the average cost of a Virginia public, four-year university.

Essentially, this program offers a stable platform to save for college without worrying about tuition inflation or excessive market risk.

Taxes Advantages of Virginia529 Plans

All 529 plans, including the new Tuition Track option, are tax-advantaged.  This means that if the funds are used toward qualified educational expenses, then distributions from the account will not be taxed. This tax benefit offers an incentive to make contributions and encourages saving.

The Virginia529 Plan offers an additional tax advantage for Virginia taxpayers who contribute to a Virginia529 plan. Each account holder may deduct up to $4,000 per account per year from their Virginia state income taxes. This deduction even allows for unlimited carryovers to future years, with a few restrictions.

If you are over 70 and want to contribute toward a Virginia529, perhaps for your grandchild, you can deduct 100% of your contributions made in one year from your Virginia taxes.[2]

Example: Let’s say you have three children, and you are saving for them as suggested in the example above, at $3,750 each. That means that all of the $11,250 you contribute this year is deductible from your Virginia taxes. Suppose you save twice that much, up to $22,500. You would be able to deduct $12,000 this year and $10,500 next year. If you are over 70, you could contribute $22,500 and claim it all in the same year!

The tremendous state tax advantages that come with saving into a Virginia529 plan can take out some of the sting of paying for a college education.

College Education Savings Strategies

Taxes can be complicated, and you want to have the confidence that you are calculating how much you need to be saving for your children’s education. We at Washington Wealth Advisors have ample experience in helping to establish 529 plans, as well as proactively working together as a trusted partner to our clients on their overall wealth management strategies.

If you are ready to get an education savings plan on paper and start moving forward, we are here to help. Call our office at 703.584.2700, email clientservices@washingtonwealthadv.com or book an appointment online with a member of our team.  We are ready to support you.

Good luck to all the students in your life on their 2021 - 2022 school year!


[1] https://www.virginia529.com/blog/virginia529-launches-the-new-tuition-track-portfolio/

[2] https://www.virginia529.com/learn/tax-advantaged/

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