Tips on how to evaluate a 529 college savings plan

• Avoid large fee plans by doing your own research and selecting your own 529 plan
• Look for a direct-sold (nonbroker) 529 plan.  Broker sold funds do not guarantee better earnings, you may in fact end up getting less after paying investment fees.
• Review the eligibility requirements and read the fine print!
• Make sure you are able to pay the minimum contribution.
• Evaluate the investment options and make sure the program offers options that meet your investment objectives.
• Compare management and account maintenance fees.
• Check for limitations. Read the fine print!
• If you are dissatisfied with your 529 plan, you can always swtich to another plan by changing the beneficiaries ont he account!  This can be done once every 12 months.
  

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Shopping for a 529 college savings program

What exactly is the right balance of risk and profit when you're saving for your child's college education? It all depends on how much time you have and how much you have to invest, but for everybody, the clock starts ticking once your child is born. Unlike retirement where you have decades to save, you have a mere 18 years until they graduate high school and start college to scrape together whatever you can. Start shopping early to save yourself the worry and heartache of uncertainty.

How to Allocate Assets for College Savings at Morningstar




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College Savings Account - 529 College Savings Plans

Besides investing in a Coverdell ESA account, there is another popular alternative to saving funds for college.  A 529 Savings plan is offered by either your state or an institution of higher education.  Withdrawals and earnings from 529 savings plans are generally tax free as long as the withdrawn funds are being used for "qualified educational expenses" like books, tuition, room and board, and supplies.  Contributions may also be partially tax deductable depending on your state.  One of the greatest strengths that a 529 plan has over a Coverdell ESA is that there are no income based restrictions on contributions.  Another strength of 529 plans is that many plans are managed for you.  So if you don't have to worry about the risk of wisely investing your funds if you're not a savy investor, all of this will be taken care of for you.  However, as with all investments, there are risks associated with 529 plans.  Your best bet is to request information directly from you plan's administrators.


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