It’s 529 College Savings Day
“So your kid can tweet ‘#blessed’”
– Number 70 of 529 Reasons to Open a 529 Plan.
This pretty much sums up my feelings toward the 529 plan my parents created for me 18 years ago. Granted, I didn’t know it was called a 529 plan until recently, but I knew my parents had some form of a savings account for my college career.
With one year down and three more to go, I feel very “#blessed” for the freedom the 529 plan has brought my family and me. Searching for the right school and degree program wasn’t an easy or short process, but I eventually decided on a school 500 miles away. With that came the worries of the cost of out-of-state tuition, but a combination of the 529 plan and scholarships allowed me to attend my dream school.
My parents would call themselves “rock stars” for creating a 529 plan, and I would say they’re not too far off. I don’t regret my college decision, and I am beyond excited for what the next three years have in store for me. I will be forever grateful for my parents’ forethought in saving for my college education.
Read the other 528 reasons to open a 529 plan here.
Below is more information about 529 college savings plans!
May 29th is officially “529 day” in celebration of 529 college savings plans. These plans are easy to set up and are great for funding college education for a child, grandchild, or other family member, and contributions can qualify for a state income tax deduction (up to certain limits). If you haven’t already started saving for college expenses, here are some things to consider when choosing the right 529 plan for your needs:
1) Each state sponsors their own 529 plan and some states sponsor more than one plan.
Check with your state to see if state income tax deductions are available for using any state’s plan or if you must use your state’s plan. Missouri and Kansas both allow you to use any state’s plan and receive a state income tax deduction.
2) You typically have two different options available for the type of plan to use.
There are direct investment plans, which you set up directly with the plan custodian (usually via an online application), and there are advisor-sold plans which you can set up through an intermediary financial institution. Go with a direct investment plan rather than an advisor-sold plan. Advisor-sold plans compensate the advisor with sales charges (commissions) that come directly out of your investment. By using a direct investment plan, you’ll keep more of your hard-earned money working toward paying for your child’s education.
3) Keep investment costs as low as possible.
Not all 529 plans are created equal. Make sure you understand the fees and expenses associated with the plan and the underlying investments. The less fees and expenses a plan assesses, the more return on investment you’ll keep in your pocket.
4) Keep it simple.
Most 529 plans have multiple investment options. An age-based investment option, which automatically reallocates to more conservative investments as the child gets closer to needing the money for college, is a simple and effective investment option for most people.
If you have any questions and would like to discuss your options for funding a family member’s college education, feel free to call us at (913) 317-6000. We can help you determine the right plan for your needs without commissions and other third-party incentives.
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