What 529 Plan Should I Choose?
There are approximately 70 529 college plans to choose from so choosing the right one might be difficult. Thus one must research well and Compare all 529 college plans and analyze them in order to select the right one and not repent later by choosing the wrong one. So how does one go about comparing 529 plans? What should be the criteria for comparison? There are various variables for comparing 529 plans but there is no standardized disclosure as sometimes the initial fees can be very high and in some cases the monthly fees might be very high. This mostly affects low income families as in the end they are left with low account balances and cannot really reap the tax free benefits of the account. Therefore it is important that thorough comparisons are made between all states plans taking into consideration the advantages and costs. Transparency must be the first criteria for comparison. For instance you might consider saving in the 529 College plan of your own state at you might get special benefits for being the resident of that state. Then the other criteria that can be considered are the type of program one is investing in, whether it's prepaid or savings; the enrollment procedure; managing mutual fund. Then one must also consider the maximum and minimum investment that has to be made. The latter is an important issue for low income families. Then does the plan require you to be a resident of the state to which the plan belongs to? What are the investment alternatives? Then what is going to be the growth pattern/ how flexible is the plan? Are collaterals required or are there other means of guarantee? What are the total fees and expenses? Go through the website for information or contact the mutual fund office directly for information. Consulting a broker for advice is also an option. Also consider the effect on your 529 college plan in case the beneficiary is able to obtain a scholarship or financial aid. How easy is it to transfer the money to some other beneficiary incase your child ultimately decides not to go to college? Once you have studies all these aspects compare 529 plan results and see which plan suits your requirements the best. You might want to go for a plan that has a high enrollment fee and lower monthly investments on the other hand you might want to invest in 529 college plan with a low enrollment cost and relatively higher monthly investment. But do remember that the main aim of the 529 college plan is to invest money for higher education that grows tax free and the most important basis for comparing 529 plans should be the tax benefits. |
