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A 529 Plan is a state-sponsored college savings account that lets you sock away money for a host of college costs, including tuition, fees, books, supplies, equipment, room and board. The 529 Plan offers a host of attractive benefits. Earnings on these funds are tax-free when you withdraw the money for qualified higher education costs. Additionally, the accounts are portable, so your children can use the money at virtually any college or university in the country. There are no income limits imposed. And 529 plans feature high contribution limits, often $250,000 or more.
Granted, most of us aren't going to stash away a quarter million dollars. Some people would be lucky to save $25,000 for their kids college costs. But if your kids are Ivy-League bound, that $250,000 figure isn't a stretch for the cost of a four-year education. And as I explain in my book, 'Zero Debt for College Grads,' you don't want your kids (or you) to go into heavy debt with massive student loans just to get a degree.
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So don't procrastinate in saving. You can learn more about 529 plans at: Savingforcollege.com. As always, the earlier you start saving the better.
Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has been featured in the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times best seller 'Zero Debt: The Ultimate Guide to Financial Freedom.'
Comments: (9)
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By: Regular Brotha on 10/22/2010 5:28PM
These are great savings vehicles for college. Here are a couple of other advantages. Most states have a plan they have negotiated a financial firm to manage for them, i.e. American Express, Fedelity, etc. You can live in one state and use the 529 of another state. Live in Ohio, invest in the New Hampshire program is complely permissable. You might make this type of choice based on the features of the investment intruments in different plans so shop and compare.
You can probably use the funds for certain education related expenses that you can't use federal grants or insured loans to cover. Off campus apartment for example. Check with a tax attorney.
If you are the parent of a college bound child and any grand parent is alive consider having the grand parent own the account. That way the proceeds are not in the parents estate for the purpose of calculating financial aid eligibility for the child.
I was a financial planner for a time.
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By: Justifyed on 10/23/2010 4:12PM
LOL @ Brotha, sounds like you're STILL a financial planner, or a least a financial advisor. Good information, thanks for sharing
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By: Eclectic Thinker on 10/23/2010 9:41PM
@Regular Brotha:
Indeed, you did provide some very good and timely information and advice to parents who are interested in saving for their children's education...especially the information about opening up the account in the grandparent's name. This information and advice was given on Good Morning America (GMA) just a few days ago by the three young ladies who serve as economic advisors for the show. Good job!
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By: Justifyed on 10/23/2010 4:13PM
I have them for my two kids now, and as soon as I can find out if I can open one on my grandson's behalf, I am doing that too.
He is only 8 months old, but it is never too early to start, not with college expenses being the way they are.
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By: Eclectic Thinker on 10/23/2010 9:43PM
@Justifyed:
No, it is NOT too early to start saving for your grandson's college education. I started the very day my son was born!
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By: Ultra Growth on 10/25/2010 2:45AM
Oh!It is wow information abut students.I was not aware before 529 Plan.But when I read this info.So I think it is great opportunity for student to save their money during when they are studying.
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By: Regular Brotha on 10/29/2010 3:34PM
Thanks for the props...I was and remain competent about financial products and thier application. It was the sales thing that tripped a brotha up. Financial services is a very difficult business. I had 2 million under managments in my fifth year, should have had 10 million by then.
Enough about me, also look for plans that have a investment horizon feature. In other words. Some plans have a feature that start out fairly agrressive when the child is young and as the student approaches college age ( 529's can be used for any post secondary education like skilled trades training or culinary school also) the portfolio becomes more conservative inorder to lock in gains.
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By: Eric on 11/05/2010 12:28PM
Is it true that the contribution limits are being lowered for Coverdell ESA's to $500 next year?
Eric
http://collegeprepu.com/coverdell-vs-529/
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By: Savings Interest on 12/29/2010 5:48AM
Savings is a must so try to find the best savings rate available and then transfer as much as possible routinely into the account every month
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