Although January is typically considered the time to “start fresh” with new habits and goals, ending your year with a quick review of your financial picture can ensure you kick off the new year strong! Here are four reasons to examine your education savings goals and open a 529 account before December 31.

1. Year-End Tax Planning:

December is a crucial time for year-end tax planning. Opening a 529 account and making contributions to it by the end of the year may qualify for tax deductions or credits, providing an immediate financial benefit and reducing your overall tax liability.

The amount of your 529 plan state income tax benefit depends on where you live and how much you contribute to a 529 plan during a given tax year. While most states limit state tax deductions to contributions made to their own state’s 529 plan, Arizona, Kansas, Maine, Missouri, Montana and Pennsylvania normally allow taxpayers to deduct contributions to any 529 account for qualified higher education expenses.¹

Virginia residents can deduct contributions up to $4,000 per account, per year, on their Virginia individual income tax returns. Related: Learn more about the tax advantages of saving with Virginia529.

2. Maximize Employer Matches:

If your employer offers a matching contribution to your 529 account, contributing in December allows you to maximize this benefit. Take advantage of any available employer matches to ensure you're making the most of your education savings potential. Related: Learn more about how your employer can work with Virginia529@work to boost financial wellness.

3. Compound Growth Opportunities:

One of the biggest advantages to saving in a 529 account is the tax-deferred compounding of the funds, which means you earn interest on the original investment as well as the interest earned over time. By making investments early on, it gives your savings time to compound and grow.

Starting your savings in December allows you to take advantage of compounding growth for the upcoming year.

4. Set the Tone for Financial Goals:

Opening a 529 account this month can help you enter the new year with a sense of financial security and peace of mind. Knowing that you've taken proactive steps toward your long-term financial well-being can contribute to a positive outlook and reduce stress about future financial obligations.

Ready to get started on education savings journey? Open an Invest529 account today!

¹ If you pay income taxes to one of these states, consult a tax professional for more information about deducting contributions to a Virginia529 account.