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I haven't opened one for my daughters yet, but from what I remember. The money can be used for anything "college" related, so books, computers, rent, not just for tuiton. If the kid does not go to college the fund can be re-appointed to another kid/grandkid or you can take out they money you put in without a fee (the interest would be taxable or hit iwth a fee). I also believe that the kid can go to any college, the state aspect is just what state gets to make interest off you. You can put the money in the Nevada 529 for instance if you thought that was better managed. Like Saintfool said, if you stay instate with the money you might get a state income tax break on it.
I also read how you can buy college credits at today's price, and they can use them when they are in college 18 years from now or when ever they go.
thanks for the site, lots off stuff.
I'm not seeing the info about the best plans. They have a Top 10 in performance, but that's just market performance. I'd be more interested to see which plans provide the best benefits / lowest costs.
If an index fund works for you, then Vanguard is the way to go because their fees are super low. I have the bulk of my retirement nestegg there.
I looked at analysis done by Kiplingers and Morningstarhttp://www.kiplinger.com/features/archives/2007/08/best529s.htmlhttp://corporate.morningstar.com/us/pr/529_ratingsa_z.pdf
Cool, thanks.Seems CA is one of the better ones and the only difference for me would be investment options, which I really don't care about. I like the simplicity and low cost of unmanaged index funds.
that what my friend said about the Illinois one " The plan got beat up before because the securities within the plan went down and tuitions went up thus screwing all those currently holding the 529 plan."'johnadams said:
Just an FYI - in NY state (and some other states, I'm sure, though I don't know), you're only allowed a tax break if you contribute to an NY 529 plan. You can contribute to other states' plans if you want, but you can't take a tax deduction for those contributions. I don't know if IL is the same way; may want to look into it.
The florida Pre Paid plan you need to be a resident for one year to join. This fall when my daughter enters Kindergarden and we hit 1 year, I'm taking the $750ish I'm sending the pre school and I'm taking out a 5 year payment plan like I never had the money. The extra $750 a month would be great, but having college paid for at the end of 4th grade is too much to pass up.I'm sure your thinking the same thing...
It's not law yet and with the current Congress the chances of this becoming law are pretty low.
Only 3% of families invest in 529s. The median income of those families is 142k. This isn't "most people". this is a small segment of upper middle class to upper class folks.
Gets you to about 85K... which should cover 2 years maybe in a private institution. Public in state though you'd have leftover.
If you're in-state and you want your kids to be Terps, they'll need to be top 5% in their class with 1,300+ Math/Engl SAT scores (using the current SAT scoring). Maryland has become extremely competitive for in-state kids.
I did my MBA there, my wife did undergrad there.
I'm not saying this to brag, but I am in this category.
Let this be a lesson for you. Spend the money now. Seek the government teet later.
Would this retroactively apply to prior deposits? That's unconscionable. You can't change the rules on people after they have relied upon them in crafting their investment strategies for putting their kids through school. I'm terrified that the Gunz's of the world are going to do this with our retirement accounts some day.
I hope and pray this is not a stress test for that to gauge the public's reaction/appetite for tax in this arena.
precedent and path to go down.
No one thinks that way. No one is suggesting that the tax is ok simply because it only affects 3% of the population.
I am also in the category. I drive a 1999 4Runner and our family lives very modestly.
