Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some
continued education for some credentials I maintain and it occurred to me that
we all could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Feeling Generous Toward Your Family? Give to your Grandkids Wisely!
What is a 529 Plan?
529 plan history
A
529 Plan is an education savings plan operated by a state or educational
institution designed to help families set aside funds for future college costs.
It is named after Section 529 of the Internal Revenue Code which created these
types of savings plans in 1996.
State plans are OK for out of state colleges
529
Plans can be used to meet costs of qualified colleges nationwide. In most
plans, your choice of school is not affected by the state your 529 savings plan
is from. You can be a CA resident, invest in a VT plan and send your student to
college in NC. Check to see if your institution is
eligible under 529 rules.
Which states offer 529 plans?
Nearly
every state now has at least one 529 plan available. It's up to each state to
decide whether it will offer a 529 plan (possibly more than one) and what it
will look like, meaning 529 plans can differ from state to state. You should
research the features and benefits of your plan before you invest, research state 529 plans
and even compare
between plans.
Tax Benefits
As
long as the plan satisfies a few basic requirements, the federal tax law
provides special tax benefits to you, the plan participant. See the top 7 benefits
of 529 plans.
Some states (but not all) offer tax incentives to investors as well.
Research your state's tax
treatment.Types of 529 plans
529 plans are usually categorized as either prepaid or savings plans.
Savings Plans work much like a 401K or IRA by
investing your contributions in mutual funds or similar investments. The plan
will offer you several investment options from which to choose. Your account
will go up or down in value based on the performance of the particular option you
select. You can see how each 529 plan's investment options are performing by
reviewing our quarterly
529 plan performance rankings. [updated date 05/2015]
Prepaid Plans let you pre-pay all or part of
the costs of an in-state public college education. They may also be converted
for use at private and out-of-state colleges. The Private College 529 Plan is a
separate prepaid plan for private colleges.
Educational institutions can offer a 529 prepaid plan but not a 529 savings
plan (the Private College 529 Plan is the only institution-sponsored 529 plan
thus far).Enrolling in a 529 plan
There are two ways to invest in a 529 plan.- Directly with the 529 Plan manager. See a list of 529 plans.
- Through a financial advisor. Find an advisor in our Pro Directory.
Are 529 plans only for my state's public colleges?Updated: 2015-01-02
There's a misconception that state-sponsored 529 plans are only geared to families that send their children to a state school. That's just not true!There are two general types of 529 plans:
- savings programs, and
- prepaid programs.
Savings
If you decide to use a 529 savings program, the full value of your account can be used at any accredited college or university in the country (along with some foreign institutions). You can look up eligible institutions.Prepaid
The states offering prepaid tuition contracts covering in-state tuition will allow you to transfer the value of your contract to private and out-of-state schools (although you may not get full value depending on the particular state).The tax law now permits higher education institutions to offer their own 529 prepaid programs. These will allow you to target your tuition prepayment to the sponsoring institution (or group of institutions). The Independent 529 Plan is the only such program currently in operation and you must check to see what restrictions they may place on the colleges covered by the plan.
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(As
with any of these informative articles, anyone who needs someone to talk to
about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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