SHORTCUTS

529 Plan Details:

Enter your state:

World's Simplest College Calculator:

How old is your child?

Find a 529 Pro:

Enter your zip code:

Enroll In a 529 Plan:

View a list of participating plans

OPTIONS

COLLEGE SAVINGS 101

Five simple steps to enrolling in a 529 plan
http://www.savingforcollege.com/articles/five-simple-steps-to-enrolling-in-a-529-plan-758

Posted: 2015-09-30

by Kathryn Flynn

Youíve decided to start saving for college, but now what? According to Savingforcollege.comís 2nd Annual College Savings Survey, 86 percent of respondents who intend to open a 529 plan in the near future arenít sure how to get started. Hereís a quick checklist to help guide families through the process:



Step 1: Choose your plan

  • Use the College Savings Planner to determine the amount you need to save and narrow down your 529 plan choices.
  • Decide if you want to purchase your plan through a financial advisor or directly from the planís website. An advisor-sold plan will cost more, but if youíre new to investing you may prefer to work with a professional.
  • Find out if your state offers a tax break for residents who use their home stateís plan. Be sure to compare your options with out-of-state plans in case you find better investment performance or lower fees elsewhere.

RELATED: 5 ways to tell if you're using the wrong 529 plan

Step 2: Name the owner and beneficiary

  • You will name yourself as the owner, but if you are using funds from an existing UGMA/UTMA account you will need to preserve the minorís ownership by designating it as a ďcustodial 529 accountĒ.
  • Grandparents or other relatives should be aware that parent- or student-owned 529 plans will have a more favorable effect on financial aid eligibility.
  • You can name yourself or almost anyone else as the beneficiary. You will have the option of changing the beneficiary to another qualifying family member if the original beneficiary doesnít go to college or has leftover funds in the account.

RELATED: 5 types of students who benefit from 529 plans

Step 3: Select your investment options

  • If you choose a static investment option, your investments will remain the same over the life of the account, unless you make changes. Portfolio options typically include choices such as: Aggressive Growth, Moderately Aggressive, Moderately Conservative and Conservative.
  • Most families prefer age-based portfolios, which are programmed to automatically change over time, shifting investments based on the age of the beneficiary. Accounts for younger children will invest more aggressively and move toward more conservative options as they get closer to college.
  • Within these portfolios, you can also find Socially Responsible investing choices or FDIC-Insured options.

RELATED: 31% of college savers are wrong about this investing rule

Step 4: Make a deposit

  • After you make your initial contribution, you can link your 529 account to your bank account to set up automatic recurring deposits.
  • A great way to fund your account is by asking friends and family for contributions in lieu of birthday and holiday gifts.
  • Check with your employer to see if they offer payroll deduction as a convenient way to fund your account.

RELATED: 7 money management tips to save more for college

Step 5: Review your account regularly

  • Watch for changes in program management and administration fees. These have been going down in recent years, but youíll want to make sure you are paying a fair price.
  • Compare your planís investment performance with other 529 plans or even your retirement account.
  • Use the College Savings Planner to track your progress toward reaching your goal.

RELATED: 8 common 529 plan mistakes to avoid

Youíve decided to start saving for college, but now what? According to Savingforcollege.comís 2nd Annual College Savings Survey, 86 percent of respondents who intend to open a 529 plan in the near future arenít sure how to get started. Hereís a quick checklist to help guide families through the process:



Step 1: Choose your plan

  • Use the College Savings Planner to determine the amount you need to save and narrow down your 529 plan choices.
  • Decide if you want to purchase your plan through a financial advisor or directly from the planís website. An advisor-sold plan will cost more, but if youíre new to investing you may prefer to work with a professional.
  • Find out if your state offers a tax break for residents who use their home stateís plan. Be sure to compare your options with out-of-state plans in case you find better investment performance or lower fees elsewhere.

RELATED: 5 ways to tell if you're using the wrong 529 plan

Step 2: Name the owner and beneficiary

  • You will name yourself as the owner, but if you are using funds from an existing UGMA/UTMA account you will need to preserve the minorís ownership by designating it as a ďcustodial 529 accountĒ.
  • Grandparents or other relatives should be aware that parent- or student-owned 529 plans will have a more favorable effect on financial aid eligibility.
  • You can name yourself or almost anyone else as the beneficiary. You will have the option of changing the beneficiary to another qualifying family member if the original beneficiary doesnít go to college or has leftover funds in the account.

RELATED: 5 types of students who benefit from 529 plans

Step 3: Select your investment options

  • If you choose a static investment option, your investments will remain the same over the life of the account, unless you make changes. Portfolio options typically include choices such as: Aggressive Growth, Moderately Aggressive, Moderately Conservative and Conservative.
  • Most families prefer age-based portfolios, which are programmed to automatically change over time, shifting investments based on the age of the beneficiary. Accounts for younger children will invest more aggressively and move toward more conservative options as they get closer to college.
  • Within these portfolios, you can also find Socially Responsible investing choices or FDIC-Insured options.

RELATED: 31% of college savers are wrong about this investing rule

Step 4: Make a deposit

  • After you make your initial contribution, you can link your 529 account to your bank account to set up automatic recurring deposits.
  • A great way to fund your account is by asking friends and family for contributions in lieu of birthday and holiday gifts.
  • Check with your employer to see if they offer payroll deduction as a convenient way to fund your account.

RELATED: 7 money management tips to save more for college

Step 5: Review your account regularly

  • Watch for changes in program management and administration fees. These have been going down in recent years, but youíll want to make sure you are paying a fair price.
  • Compare your planís investment performance with other 529 plans or even your retirement account.
  • Use the College Savings Planner to track your progress toward reaching your goal.

RELATED: 8 common 529 plan mistakes to avoid

 

Reset email successfully sent.
Please check your inbox.

Close
page loadtime mark

Advertisement


close