OT- 529 plans
- Thread starter msuJD164
- Start date
I've had one open for a little over a year. Really, the only major advantage to it is that it's tax free dollars as long as it's eventually used for educational expenses. While it can certainly grow with the market, I've been told to not expect any major returns on it. Taking a quick look, I see that mine has gained about 5% in the last year.
I don't believe that there really are any major disadvantages. Sure, you might be able to get better gains elsewhere but you'd lose the tax free advantage. For me, it was really more about setting money aside and forgetting about it, anyway.
I don't believe that there really are any major disadvantages. Sure, you might be able to get better gains elsewhere but you'd lose the tax free advantage. For me, it was really more about setting money aside and forgetting about it, anyway.
I have three set up
for three kids of course. Been very happy with our plans. Invested pretty aggressively since my kids are young and the tax benefits are/will be nice.
Remember: you can't deduct your contributions from your taxes now like you can an IRA for example. Keep that in mind.
Also something I like is the fact you can essentially pass money from one account to another (if used for education). So if my oldest (a girl) is smart and gets a scholly I could use that money and move over to the boys plans. Which considering they like to fight, watch the three stooges, run around naked/pee in the yard, I'm pretty sure I'm gonna need it.
for three kids of course. Been very happy with our plans. Invested pretty aggressively since my kids are young and the tax benefits are/will be nice.
Remember: you can't deduct your contributions from your taxes now like you can an IRA for example. Keep that in mind.
Also something I like is the fact you can essentially pass money from one account to another (if used for education). So if my oldest (a girl) is smart and gets a scholly I could use that money and move over to the boys plans. Which considering they like to fight, watch the three stooges, run around naked/pee in the yard, I'm pretty sure I'm gonna need it.
lol
Sounds like me and my brothers. We turned out okay. Got college degrees too. They'll be fine.
I started one for my granddaughter about 4 years ago. She'll be 5 in February. I do monthly contributions, and the growth has been decent, but not great since it follows the market ... basically tracks the S&P 500 I think. It's the Virginia fund (not sure offhand of the full name) that's been mentioned on here before. By the time she's 18 and going to college, it should be a good supplemental fund for her.
I've recently started one
Advantages:
* Any capital gains, growth, dividends, etc. from the fund are all tax free as long as the money is withdrawn for qualified educational purposes.
* In a lot states have plans that allow you to write off your initial contributions from your state income tax earnings. Granted, this isn't near the benefit of writing it off your federal return like 401k contribution, mortgage interest, etc. But it still helps.
Disadvantages:
* Most 529 plans are pretty strict about what you can invest in. They won't let you get too risky, which can be both good and bad.
Overall, I went with the Arkansas plan since I'm an Arkansas resident. It gives me the state tax writeoff. I've been pretty happy with it so far. Really, really smart to set up monthly contributions when they're real young and have a nice little college fund when the time comes.
BFB
Advantages:
* Any capital gains, growth, dividends, etc. from the fund are all tax free as long as the money is withdrawn for qualified educational purposes.
* In a lot states have plans that allow you to write off your initial contributions from your state income tax earnings. Granted, this isn't near the benefit of writing it off your federal return like 401k contribution, mortgage interest, etc. But it still helps.
Disadvantages:
* Most 529 plans are pretty strict about what you can invest in. They won't let you get too risky, which can be both good and bad.
Overall, I went with the Arkansas plan since I'm an Arkansas resident. It gives me the state tax writeoff. I've been pretty happy with it so far. Really, really smart to set up monthly contributions when they're real young and have a nice little college fund when the time comes.
BFB