- Why is a 529 plan a bad idea?
- What are the disadvantages of a 529 plan?
- What’s better than a 529 plan?
- Is a 529 better than a savings account?
- Can a 529 plan lose value?
- Do I need 529 for each child?
- Can I use my child’s 529 for myself?
- Do banks offer 529 plans?
- What is the average return on a 529 plan?
- Is now a good time to open a 529?
- Are 529 accounts worth it?
- Who offers the best 529 plan?
- Can I start a 529 for myself?
- What is the best college savings account?
- How much should I save in 529?
Why is a 529 plan a bad idea?
A 529 plan could mean less financial aid.
The largest drawback to a 529 plan is that colleges consider it when deciding on financial aid.
This means your child could receive less financial aid than you might otherwise need..
What are the disadvantages of a 529 plan?
Disadvantages of using a 529 plan to save for college529 plan funds must be spent on qualified expenses to avoid tax and penalty. Non-qualified distributions are subject to income tax and a 10% penalty on the earnings portion of the distribution. … 529 plans owned by a third-party can hurt financial aid eligibility.
What’s better than a 529 plan?
A 529 savings plan is one of the best ways to save for a child’s college education, but there are alternatives. … Custodial UGMA and UTMA accounts can be used for purposes other than education. Roth IRAs have tax advantages similar to 529 plans and they don’t count as assets for financial aid purposes.
Is a 529 better than a savings account?
529 plans offer a greater return on investment along with the greater complexity and greater risk of loss. Other important benefits of 529 plans include better financial aid and tax treatment of the savings.
Can a 529 plan lose value?
False. You don’t lose unused money in a 529 plan. The money can still be used for post-secondary education, for another beneficiary who is a qualified family member such as younger siblings, nieces, nephews, or grandchildren, or even for yourself.
Do I need 529 for each child?
While it’s technically possible to use one 529 plan for multiple children, rather than making things simpler, it actually makes them more complicated. From beneficiary rules to investment strategies to ultimate fairness, having a separate 529 account for each child is the preferred way to go.
Can I use my child’s 529 for myself?
A 529 account can be used for other types of education besides college, including trade and vocational schools. As the 529 account owner, you always have the right to change beneficiaries to another family member – or even yourself.
Do banks offer 529 plans?
Only six states offer 529 plans where banks act as the program manager, the direct contact for consumers: Arizona, Indiana, Montana, Nebraska, Alabama and Illinois. [Understand how to juggle multiple 529 plans.]
What is the average return on a 529 plan?
Sipos has looked at thousands of 529 plans that are maturing (i.e. the kids are going to college now), and there is little to no growth in any of the plans. He says that most parents are thrilled to just get out their contributions and not lose money! A rate of return around 3% for a 529 plan is considered amazing.
Is now a good time to open a 529?
Now’s a good time to invest in a 529 plan and increase your contributions using an investment strategy called “dollar cost averaging,” Kruger advised. … The effect is that you buy more of an investment when prices are low and less when costs are high.
Are 529 accounts worth it?
Many people saving for college choose 529 plans as their investment vehicles, and that’s for good reason. 529 plans offer tax advantages that can help you allocate even more dollars to education expenses. There are a variety of plans available, and you’re not limited to just your own state’s plan.
Who offers the best 529 plan?
Best 529 plans New York’s 529 plan, Direct Plan. Wisconsin’s 529 plan, Edvest. West Virginia’s plan, Smart 529 WV Direct College Savings Plan. California’s plan, ScholarShare 529.
Can I start a 529 for myself?
Regardless of your age, you can set up a Section 529 plan for yourself to fund educational expenses now or in the future. … You can apply the funds for tuition, books, fees and even a computer, as long as it is used to further your studies.
What is the best college savings account?
But 529s and ESAs are generally considered better choices for college savings because of their tax advantages. There are two types of tax-advantaged college savings plans designed to help parents finance education: 529 Plans and Education Savings Accounts (also known as ESAs or Coverdell accounts).
How much should I save in 529?
If you want to check how much you should have saved based on your child’s age, multiply the child’s current age by $3,000 for an in-state public 4-year college, $5,000 for an out-of-state public 4-year college and $7,000 for a private non-profit 4-year college.