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529 college savings

Posted on 2014-12-27
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Hello,

I have two kids, 6 year old and 2 year old, and I wanted to start on a 529 savings plan, but don't know if there are any gotchas with these type of plans.  Anyone know, first hand, on how to start one and the options available?
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Question by:uppercut7141
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by:Arthur_Wood
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You might want to check out http://www.experts-exchange.com/Other/Math_Science/Q_27939471.html which asks almost the same question.
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by:d-glitch
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This site offers an excellent starting point:
   http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/529Plans/P010756

and beware of brokers' potential conflict of interest.
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by:dhsindy
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This can get a little complicated so I would call where you do your banking and ask for financial advice about 529 plans (there are different ones for different purposes).  Your particular situation is important.

Basically, IRS Section 529 defines the plans but the various states can and have modified the plans  , so, you need to talk to someone who understands you states position.  There are two types of plans (a saving investment plan - similar to a 401(k) that invests in the various markets - you are the one taking the risks - your investments will rise and fall with the market) the other kind is (like a pre-paid tuition plan, you pay tuition at today's prices but you may be limited on your choice of schools - the fund manager bears most of the risk).  There is a contribution limit (notify others who my donate to the persons account) and probably penalties if the money is NOT spent for school expenses and there may be a deadline for using the money.

Your being a good parent - the important thing is to get professional local advice and choose a plan and get started as quickly as possible.

If you're interest in reading the IRS Code you will see there are many restrictions: http://www.law.cornell.edu/uscode/text/26/529
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by:nickg5
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Your kids are lucky to have you making plans for them.
Good luck.
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