Connecticut 529 College Savings: How to Choose the Right Plan for Your Family

Why Connecticut Families Often Start With CHET

Connecticut residents often begin their search with the Connecticut Higher Education Trust 529 college savings program, known as CHET. This plan is sponsored by the State of Connecticut and offers a clear structure for families who want to save for higher education.

Key features include:

• A Connecticut state income tax deduction for contributions
• A range of portfolios designed for long-term saving
• A simple online enrollment process
• Tools that help families track progress toward college goals

For many local families, the state income tax deduction becomes an important part of their decision. This deduction is not available for plans sponsored by other states.

How CHET Works

The Connecticut 529 plan gives families a dedicated way to save for future education expenses. CHET supports both residents and nonresidents, although the state income tax deduction applies only to Connecticut taxpayers.

Investment Options With a Clear Structure

CHET includes several portfolio types that suit different saving styles:

• Age-based portfolios that shift over time
• Static portfolios with steady risk exposure
• Individual fund portfolios for families who want specific allocations

These options allow families to match investment objectives to the child’s age and the planned timeline for future education costs.

Tax Advantages for Connecticut Residents

Connecticut residents may deduct CHET contributions on a per-beneficiary basis. This can reduce state income tax and help families direct more resources toward future education savings. Tax benefits vary by household and should be reviewed with a tax professional.

Flexible Use of Funds

CHET funds may be used to pay for:

• Tuition at accredited colleges and universities
• Room and board
• Textbooks and course materials
• Required equipment or supplies
• Certain apprenticeship program expenses
• A limited amount of K–12 tuition
• Qualified education loan repayments within federal limits

Oversight From the State of Connecticut

CHET operates under the authority of the Office of the Treasurer. The plan follows state and federal rules that guide investment choices, disclosure requirements, and use of funds.

Comparing CHET With Other 529 College Savings Plans

CHET is Connecticut’s home-state 529 plan, but many families also review plans from other states. National programs can differ in fees, investment options, portfolio structure, and flexibility, which may make another plan appealing depending on your goals.

Families often compare plans because they may:

• Prefer different investment styles or portfolio options
• Want the option to open a plan outside their home state
• Expect to move out of Connecticut
• Care how age-based portfolios are structured
• Want to evaluate fee differences and long-term impact

For Connecticut residents, CHET offers a meaningful advantage: it is the only plan that provides a Connecticut state income tax deduction, which can significantly benefit long-term savings.

When CHET May Make Sense

• You want Connecticut’s state income tax deduction
• You prefer a clear and straightforward investment lineup
• You plan to make steady, predictable contributions
• You value a program sponsored by the State of Connecticut
  
  

When Another State’s 529 May Make Sense

• You want investment choices CHET does not offer
• You expect to relocate before a child begins college
• You want flexibility to compare multiple plan structures
• The Connecticut state deduction is not the deciding factor

How the Connecticut State Tax Deduction Works

CHET’s deduction applies on a per-beneficiary basis each year.

A few important points:

• The deduction applies only to CHET.
• Funds deducted must remain in the plan for the taxable years following the deduction.
• Withdrawals used for qualified expenses remain tax-free at the federal level.
• Withdrawals used for non-qualified purposes may be subject to federal income tax and a federal tax penalty.

Families who want to maximize state benefits generally stay with CHET for this reason.

How to Open a CHET 529 College Savings Account

Parents and caregivers can open a CHET account through the official CHET website. The process is simple:

1. Create or sign in to an online account.
2. Provide information about the beneficiary.
3. Select investment options that match your goals.
4. Make an initial contribution.
5. Set up ongoing contributions if desired.

After setup, the account can be managed and updated as your child’s education plans take shape.

How 529 Plans Fit Into a Broader Financial Plan

A 529 plan works best when it’s part of a larger financial picture, not a standalone decision. For many families, the challenge isn’t choosing whether to save for education, but how to balance that goal alongside other priorities.

Balancing education savings and retirement
College is important, but retirement can’t be financed later. Many families prioritize retirement contributions first, then direct additional savings toward a 529 plan to avoid compromising long-term security.

Considering financial aid implications
529 plans are generally treated favorably in financial aid formulas, but account ownership matters. Parent- and grandparent-owned accounts are assessed differently, and understanding how assets and distributions are counted can help avoid unintended reductions in aid.

Coordinating with trusts, gifts, and estate planning
For higher-net-worth families, 529 plans often fit into broader wealth-transfer strategies. Contributions can align with annual gifting, trust structures, and long-term estate planning when coordinated thoughtfully.

The role of grandparents and family gifting
529 plans offer grandparents a structured way to support education while retaining flexibility. Ownership, timing, and coordination with the family’s overall plan all influence how effective these contributions are.

A Path Forward for Connecticut Families

Choosing a 529 plan comes down to your family’s timeline, tax situation, and comfort with long-term investing. For many Connecticut families, CHET offers a straightforward way to save for education while capturing state tax benefits, but the right choice depends on your broader financial picture.

SKY Investment Group helps families compare 529 options, understand how education savings fit into their overall plan, and make informed decisions with confidence. If you’d like guidance building or refining a college savings strategy, our team is here to help.