By What should I look for in a 529 plan?
To help guide your decision, here are eight of the key factors to look at when choosing a 529 plan.
- Prepaid vs. College Savings Investment Plans.
- In-State or Out-of-State?
- Taxes.
- Fees.
- Usability.
- Advisor- or Direct-Sold Plans.
- Financial Aid.
- Investment Strategy.
Which 529 plan should I use first?
The best bet is to use up the tax credits first, and then use the 529 funds on remaining expenses. To avoid penalties, make sure you withdraw money from the 529 in the same year it will be used for educational expenses.
What is a good rate of return for a 529 plan?
A 529 plan, on the other hand, might easily return an average of 6% or more each year, helping you accumulate more cash for when those tuition bills start rolling in.
What does Dave Ramsey say about 529 plans?
Dave warns against using a 529 Plan that would freeze your options or automatically change your investments based on the age of your child. Stay away from so-called “fixed” or “life phase” plans. You want to stay in control of the mutual funds at all times.
When should you not use a 529 plan?
Pros and Cons of 529 Plans
| Advantages | Disadvantages |
|---|---|
| Federal income tax benefits, and sometimes state tax benefits | Must use funds for education |
| Low maintenance | Limitations on state tax benefits |
| High contribution limits | No self-directed investments |
| Flexibility | Fees |
Why 529 plans are bad?
A 529 plan could mean less financial aid. The largest drawback to a 529 plan is that colleges consider it when deciding on financial aid. This means your child could receive less financial aid than you might otherwise need.
Which state offers the best 529 college savings plan?
as well as other investment
What should we do with the 529 plan?
529s Aren’t Just for Four-Year Colleges. You can use money in a 529 at any institution of higher education that receives financial aid.
How much should I contribute to a 529 plan?
Beginning in 2019, each year individuals may contribute up to $6,000 into a Roth IRA ($7,000 for those aged 50 and above). Individuals can contribute a maximum of $15,000 into a 529 plan on an annual basis, with the option of bundling 5 years of contributions ($75,000) into a single year.