529 Plans?
Shizelbs
Posts: 7,433
Anybody have any thought or opinions on 529 plans?
Post edited by Shizelbs on
Comments
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529 plans are very effective and tax efficient way to save for college. I like the fact that the parents control the $, not the kids. On a trip to Thailand, I spoke with two 20 yr old American young adults. They told me that they have been travelling throughout Asia for almost three years, using the college funds that they parents set aside for them through the traditional college fund. They decided that they'd put off college and used all the the $ set aside by their parents to travel. I asked them about their parents' reaction. They answered that they parents were oppose to their plan, but they had control of the college fund --since they turned 18; their parents could not do anything about the $. I told myself at the time that I'd not set aside for college fund through the tradition way. I am so thankful that the 529 plans came out. If my kids decided not to go to college, my wife and I will use the $ from the 529 plan for a big trip to Europe.
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They appear to be a good idea. Some states also offer a state income tax deduction for contributing to the state sponsored plan. Be sure to shop around, since you don't have to use your own state's plan (but you usually do if you state gives a tax deduction for the money put in). As with all mutual funds, watch the fees in comparison to the expected returns. Many plans have a broker advised option (instead of strictly direct investment), but these commonly use a "loaded" version of the same investment options, so be sure to evaluate just how much you are paying to that investment advice.
I think morningstar has an evaluation of each state's plan. You might have to pay for the report, but it is likely money will spent.
