529 plans are one of the best ways to save for college, yet few parents have accounts for their children. According to a recent survey from financial services firm Edward Jones, 529 plans were the least utilized college savings strategy by parents.
Parents who use a traditional savings account or other vehicle to save for college may be leaving money on the table. 529 plans allow savings to grow tax-deferred, and distributions are tax-free when the funds are used to pay for qualified education expenses such as tuition, fees, books, supplies and equipment and, if the student is enrolled at least half-time, room and board costs.
But for many families, getting started with a 529 plan can seem overwhelming. Parents who are looking for guidance may consider opening a 529 plan through CollegeBacker.
CollegeBacker is a free platform that helps families enroll in and manage a 529 savings plan. CollegeBacker is an SEC registered investment adviser, which means they have a fiduciary duty to put your interests first and they do not take commissions on your investments. In addition, CollegeBacker is offering a $25 gift to readers of Savingforcollege.com to help you kick-start your college savings.
Here are a few ways CollegeBacker can help you open a 529 plan and start planning for your child’s future.
CollegeBacker does the research
There are close to one hundred 529 plans available, with over 1,400 investment options to choose from. CollegeBacker finds the best 529 plans with the lowest fees and recommends portfolios with an appropriate amount of risk based on your child’s age.
CollegeBacker manages your 529 plan investments
To maximize the value of a 529 plan account, your mix of investments should depend on your child’s age. If your children are younger, you can invest more aggressively since there is more time to absorb risk. As your child gets older, assets should be shifted toward more conservative investments such as bonds, CDs and money market accounts.
CollegeBacker helps you select an age-based 529 plan investment portfolio that shifts allocations automatically as your child gets closer to college.
CollegeBacker helps you determine how much to save each month
CollegeBacker offers a unique college savings calculator that not only helps determine how much you need to save each month, but also measures the impact of 529 plan gifts from friends and family.
Experts recommend saving one-third of a child’s future college costs and covering the remaining two-thirds with current income, scholarships or financial aid, and loans. CollegeBacker helps you set a savings goal and design a roadmap to help you meet that goal.
CollegeBacker makes it fun and easy for family and friends to help contribute
Families save 43% more, on average, with CollegeBacker’s “circle funding” features. Each account has a personal link that can be shared with friends and family around birthdays, holidays, and other gift-giving occasions. Gift givers can choose to schedule one-time or recurring contributions, and can contribute with a credit card.
CollegeBacker keeps track of 529 plan gifts and your child’s progress
Gifts received through CollegeBacker are invested in the child’s 529 savings plan. Account owners and gift givers receive updates and are able to track the child’s progress.
It only takes five minutes to open a 529 plan through CollegeBacker
The earlier you start to save for college in a 529 plan, the more time your savings have to compound tax-free. Parents who start making contributions when their child is born tend to accumulate about a third of their ultimate college savings in the form of investment earnings. Those who wait to start saving until their child enters high school need to save six times as much per month to reach the same goal.
CollegeBacker offers families a quick and easy service to get started with a 529 plan. It’s never too early to start making contributions – in fact, 20% of CollegeBacker families start saving before their child is born!
Enjoy an exclusive $25 gift from CollegeBacker
Open and fund your CollegeBacker account today and take advantage of an exclusive VIP offer for Savingforcollege.com readers: a $25 matching gift contribution toward your child’s college savings.