May 29th has been nationally recognized as 529 College Savings Day, a way to raise awareness for the importance of saving early for college. My guess is that 99% of people have never heard of 529 Day so you are now ahead of the pack. The bigger problem is that more than two-thirds of investors don't know what 529 plans can do. Only 32 percent of people could correctly identify a 529 plan as an option for saving for college expenses, according to a survey by Edward Jones. That is a depressing number when you consider that 529 plans offer many tax benefits that help your investments grow over time. The biggest advantage is that investment earnings aren't subject to capital gains tax when used for qualified education expenses. Furthermore, 33 states and the District of Columbia sweeten the deal by giving residents a tax break if they invest in their state's 529 plan.
The Best and Worst 529 College Savings Plans of 2014
My weekends are packed with activities to entertain my 2-year-old daughter Chloe. Virtually all my friends have children, from newborns to kindergarten age. We all reminisce about the days when college was a third of the cost and wonder how the heck we will pay for our kids to go to college. With 50 colleges charging over $60,000 a year, where will prices be in another 10-15 years?!?!? My dad always thinks outside the box and he thought I should train to become a football placekicker so I could earn a scholarship. While definitely a cool idea, it never progressed past a Nerf football being kicked about 15 yards in the backyard.
Grandparents’ 529 College Distributions Can Be a Ticking Time Bomb
Are you a grandparent thinking of helping out a grandchild fund their college expenses? Be aware of 529 plan structures to ensure that your gift doesn’t turn into a bomb that destroys your grandchild’s financial aid.
According to a recent Fidelity Investments survey, 65% of parents saving for college expect grandparents to contribute. In recent years, a growing number of grandparents have set up 529 college savings plans but before writing a check, grandparents must be aware of the potential pitfalls. Grandparents shouldn’t have to worry about their 529 gift but many websites don’t explain things clearly and many people are shocked when things go seriously wrong. Don’t be left like tennis legend John McEnroe who famously stated “You can’t be serious!”
Saving For College 529 Plans with Upromise
As a new father, I marvel at all the new things my one year old daughter Chloe does. But like all new parents, I joke and mostly fear that the cost of education will be in the millions by the time she graduates high school. While I pray that education inflation slows from its ridiculous pace of 7%+ per annum, I know that I need to prepare for the worst which means saving as much money as possible sooner rather than later.