Author Topic: 529 College Savings Plans  (Read 9964 times)

aspiringyogini

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529 College Savings Plans
« on: February 14, 2012, 04:07:12 PM »
Does anyone have any advice or expertise in these 529?  I live in a state income tax-free state and it doesn't help our tax situation to choose a 529.  I am trying to help my father-in-law set up something for his granddaughter (my neice) who may or may not be attending college.  (However, I heard that we could use the money to send her to boarding or military school, if need be.)

I'd appreciate hearing anyone's experience with using these plans.

Thanks in advance,

AY

arebelspy

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Re: 529 College Savings Plans
« Reply #1 on: February 14, 2012, 08:06:20 PM »
I've heard of some neat 529s that are based on "reward" points you get while shopping that add to the 529 (aside from your normal contribution).  Now obviously it would be very anti-Mustachian (and flat out stupid) to increase your consumerism to add a small kickback to the 529, but it's something to look into if you're starting one anyways, and would be shopping for those items (groceries, etc.) anyways.

That aside, many 529s are state specific, so you may want to look into what is offered where you live.
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palvar

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Re: 529 College Savings Plans
« Reply #2 on: February 15, 2012, 09:02:48 AM »
I've been looking into these too.

Pennsylvania has a guaranteed return 529 plan.  You invest a certain amount and when you withdrawal the money to pay for a specific college, you receive a return equal to the increase in tuition for that college. 

However, I can never get enough clarity on how these returns are determined to make me comfortable.  I don't like investing in something that I can't understand.  Has anyone else had experience with these?

arebelspy

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Re: 529 College Savings Plans
« Reply #3 on: February 15, 2012, 09:31:04 AM »
You invest a certain amount and when you withdrawal the money to pay for a specific college


I've heard mostly negative things about those type of plans, mostly due to having to "lock in" to a single college (or even a series of state colleges), and potentially losing quite a bit if your student doesn't go to college, or that college, whereas a 529 can be used for education for anyone (by changing the beneficiary) for various educational costs.
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MEJG

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Re: 529 College Savings Plans
« Reply #4 on: February 15, 2012, 10:51:31 AM »
I really like the Vanguard 529  https://personal.vanguard.com/us/funds/529portfolios  The biggest downside is the minimum starting investment is $3000.  The major upsides as I see it are that the account is help by the person who opens it, and the recipient can be changed.  So, if you had more than one child you wanted to plan for and they would be in college / need the money for education at different times you can just have the one account, as long as you are not in danger of hitting maximums. 

I think they can be used for boarding school, but I am not sure.  I know they can be used for technical programs, as well as 4 year schools.

I like vanguard because they are low fee, and there is a great variety for different investing styles.

aspiringyogini

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Re: 529 College Savings Plans
« Reply #5 on: February 16, 2012, 02:34:28 PM »
Hi MEJG,

I'm glad you mentioned Vanguard, since this is where I want to open the 529 and I already invest my own personal money there.  I am hoping to get some info from them, but I don't trust their information totally, since they want your money invested with them.  It is also good that you say that the recipient can be changed; that leaves a lot of flexibility.  Wonder if I could use it to go back to graduate school.....again?  That is if my niece doesn't use it. 

I have read a little on Clark Howard's website and he has some favorites.  I read there that his favorites allow you to use the money for private school, tutoring, books and most educational needs, not necessarily only college (also trade schools as you suggested).  I am thinking this is good in case we have to put my "troubled" niece in boarding school or a military academy (or if it would cover teenage "mommy and me" classes, if need be, yikes!!!!).

I just can't find enough solid information about this and would love to hear from someone who has invested and then use the plan for the intended darling child who it was set up for.

Thanks in advance,
AY 

MEJG

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Re: 529 College Savings Plans
« Reply #6 on: February 16, 2012, 08:17:51 PM »
Hi AY,
    You can definitely open one for yourself, save money in it and then use it for yourself or transfer it to another recipient (up to a first cousin I believe).  I read a blog post from a man who opened one under his own name when he got married, something like 3 years before their first child was born.  I think this was genius :-)  In fact I think anyone not in debt who is planning on kids but doesn't yet have them should.

Contribution limits are $13,000 per contributer per year (so a couple could put $26,000 away a year).  Alternatively one can contribute up to 5 years worth of contributions, $65,000, in 1 year (and then skip 4 years) per contributer.

If only I was at a point where I could do that.... :-)

Good Luck!


Mr Mark

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Re: 529 College Savings Plans
« Reply #7 on: February 16, 2012, 09:03:30 PM »

Are there any Plans where it would allow payments for private schooling, as well as college later?

biliruben

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Re: 529 College Savings Plans
« Reply #8 on: February 17, 2012, 04:54:44 AM »
You can invest in a Coverdell college savings account up to $2000 a year, and it is more flexible, allowing you to invest in pretty much anything you want, as well as use it towards private high-school tuition, I believe.

As far as 529s go, I found Utah's to have the best low-fee investment options.

I also invested a bit in the Washington GET plan, which is a 529 where you buy a 100 credits and you get a year of tuition room and board at U Washington, or the equivalent monetary value an just about any school in the country.