Getting Past Contribution Limits for 529 College Savings Plans

There are a few major investments that almost every family faces – cars, homes, and of course, college educations for the children. The importance of having a college degree seems to grow every day, but unfortunately, the cost of attending college seems to grow right along with it.

In fact, the cost of attending college is downright prohibitive for some families, and there is no reason to think that this situation will improve any time soon, and every reason to think it will actually get worse. What can you do if money is tight, but you want your child to have access to an education that will help them succeed in the job market?

Scholarships and grants help some families, but they seldom foot the entire bill, and student loans can be an expensive burden to saddle onto your child on graduation day. Another problem with all of these college funding options as well is that it is impossible for you to know if you are getting them until your child is actually ready to enter college.

You can’t wait that long to plan for education financing if you want your child to be able to attend the college of their choice. So, what is a hard working family to do to ensure that they will have the money to put their kids through school? A 529 savings plan can be a great option.

A 529 savings plan is a state run savings account that lets you save money for your child’s education and gives you a tax break for doing so. Anyone can contribute to your 529 savings plan, so if grandparents and the extended family want to help save, they can do so.

Some 529 savings plans function just like normal saving accounts, while others pre-paid accounts for schools that let you pay the tuition of a college in advance.

The idea is that the price you pay today will be significantly cheaper than the price you would pay by the time your child is old enough to attend that school (of course, then you have to hope they want to go there!). These savings accounts allow you to grow your money faster by investing it in the stock and bond market as well.

There is a drawback to these 529 college savings plans, however, and that is the contribution limit. Each state comes up with its own contribution limit, but they generally range from $100,000 to $200,000 per family. That may sound like a lot of money, but is it really?

Would it be enough if your child wanted to attend an Ivy League or private university? Would it be enough to give several children room, board, books, and tuition at even a public state school? If you are facing either of these scenarios, you need to find a way around the contribution limit on these accounts. There are a few things you can do.

You can have relatives set up separate accounts instead of contributing to your account, and you can have accounts in multiple states. You can put your money into different types of accounts – one pre-paid and one savings – for your children. You can also have each parent start an account, if they are unmarried.

The most important thing to remember about starting all of these accounts and getting around the contribution limit is that you will need to understand the tax implications for each account. If you have accounts in different states, each state’s own tax laws will apply to each account.

Each account holder will be responsible for reporting contributions to their own account. All of this extra work may be worth it in the long run, though, so your child does not have to worry about finances will working on their degree.

The Pros and Cons of the Coverdell ESA for College

As you’re setting up investment plans for your child’s college, it’s smart to be aware of the pros and cons of the Coverdell ESA for College. This educational savings account is a very attractive savings plan for many people. Let’s take a look at some of the negatives and positives of this program and so you can see if it’s a fit for you.

Pro- The Coverdell Education Savings Account can be self-directed with a wider array of investment products available than a 529 plan. The account can be placed in almost any sort of investment. Typically, stocks, bonds, bank CDs, mutual funds and unit investment trusts. No part of trust assets may be invested in life insurance contracts.

Pro- The Coverdell funds are available to finance elementary and secondary school, not just college. This includes items such as tuition, fees, tutoring, books, supplies, room and board, uniforms, transportation and computers.

Pro- Earnings accumulate tax-free. Qualified distributions are exempt from federal income tax. Please note that contributions are not deductible on federal or state income tax.

Pro- Corporations may contribute. This even includes tax-exempt organizations. Regardless of income level, corporations may contribute to an individuals Coverdell account.

Pro- People can contribute to both a Coverdell account and a section 529 plan in the same year. Note that there may a gift tax implication if you give more that $12,000 per beneficiary.

Con- Contributions to the Coverdell ESA are limited to $2000 per beneficiary per year. Here’s an example, you have a son and a daughter that you want to contribute $3500 into Coverdell accounts for. You deposit $2000 to your son’s account and $1500 into your daughter’s.

Their grandmother wishes to add another $1000 but she is only allowed to put $500 into your daughters account as the $2000 limit has been reached. At $2000 a year, it would be tough to have this be your entire college savings plan.

Con- Contributions can only be made until the beneficiary reaches age 18. This may be a non-issue with some families but a 529 plan would allow you greater flexibility. There are no age restrictions for special needs beneficiaries.

Con- The money must be used by the time the child reaches the age of 30. If the funds are not used, the earnings will be taxed as ordinary income plus a 10% penalty.

Con- There is less flexibility in changing beneficiaries in a Coverdell ESA. Coverdell plans are considered permanent gifts. You cannot open up an account for your child and take back the money for your own use. Typically, the parents are responsible for the account until the child reaches 18. Then, the beneficiary usually takes control of the account. There is some ability to change beneficiaries.

Con- The Coverdell ESA is not eligible for the state tax deductions available for some 529 plans. The available 529 state tax deductions vary from state to state. Of course, a tax deduction is not the only reason to select an investment.

Con- The contribution limit is phased out for contributors with an adjusted gross income between $95,000 and $110,000 for single people and between $190,000 and $220, 000 for joint filers. A clever way around this con if you’re in this income bracket is to give the money to your child and let her open a Coverdell for herself.

After looking at the pros and cons of the Coverdell education savings fund, you can see if this is a wise investment for your child. The items that have been identified as cons are non-issues for many people. Coverdell is a good investment overall for most families. Talk with your tax profession and see if it’s right for you.

Viability of US Savings Bonds to Fund College

Saving for college has become a priority for many American families. With most university tuition rates climbing every year at record pace, it can seem nearly impossible to send your children to a good college or university without going into deep debt. But it doesn’t have to be that way. With a little planning, you can make your college savings plan go a long way.

Using a US Savings Bond to Save for College

Many parents with young children wonder if it is viable to use US savings bonds as a savings vehicle for their children’s future education. The truth is that a US savings bond can be a great way to save for college for many families.

Most US savings bonds offer competitive interest rates, and they come with the added security of being backed by both federal and state governments, as well as being subject to certain income tax benefits from both levels of government. Here is some information about saving bonds and what they can do to help you save money for your child’s college education.

The Series EE Savings Bond

One of the most popular US savings bond vehicles that are purchased by parents who are looking to save money for their children’s college education is a US savings bond from the series EE savings bond series. Analysts have recently estimated that a US savings bond from the series EE that was purchased in 2006 will likely earn 3.2 fixed interest rate percentages over the life of that bond.

The Series I Savings Bond – AKA the I Bond

What about the series I savings bond? It is also commonly known as the I bond. What is the difference between the series I savings bond and a series EE US savings bond? The main difference is that the series I savings bond carries an interest rate that is determined by the federal government.

In general, the federal government determines the interest rate for the series I savings bond by determining a basic low fixed rate, as of now that is one percent, and then adding on an inflation rate to that that reflects the latest increases in the consumer price index.

How to Make Your Money Grow with a US Savings Bond

Regardless of whether you choose an I US savings bond or a Series EE savings bond, here are some basic things you should know about how to make your money grow. First, you should always wait at least one year before cashing in your US savings bond.

You should also know that in most cases you will forfeit at least three months interest if you decide to cash in your US savings bond within five years of your initial investment date.

Tax Incentives of US Savings Bonds

In most cases, you will find that your US savings bond comes with many attractive tax benefits. For interest, you will not have to pay taxes on your interest on your state tax form, and in many cases, your interest may also be free from federal taxes.

Why a US Savings Bond May Be a Better Option than a 529 Investment

In most cases, analysts predict that a US savings bond will tend to perform better than many 529 college savings investment plans. However, this strictly depends on what kind of 529 college savings investment vehicle you have chosen.

Some state 529 college savings plans will indeed outperform a US savings bond over the long haul. Much of this depends on the condition of the market in future years, inflation trends, and a number of other fluctuating conditions.

Pros and Cons of Pre-paid Tuition vs. 529 College Saving Plan

There are so many ways for concerned parents to plan for their children’s future educational expenses. There are federal and state educational tax credits, savings bonds, savings accounts, and now, states 529 college savings incentives programs. These state 529 college savings incentives programs are relatively new, and many parents do not know whether they are suited for their financial needs.

We investigate the nature of these state 529 college savings incentives programs and what you can expect from the different types of state 529 college savings incentives programs.

Pre-paid Tuition vs. 529 College Savings Plans – Two Sides of the Same Coin

Many parents find themselves trying to decide between investing in either a pre-paid tuition program or a state 529 college savings incentives programs. The truth is that both of these represent two sides of the same coin. In truth, both of these types of plans are officially known as ‘section 529’ plans because they are both described under the same tax code and are subject to many of the same benefits. Even so, they are different and are often subject to different restrictions and benefits.

What’s All the Fuss with State Pre-Paid Tuition Plans? Pros Offer Peace of Mind

Again, a state pre-paid tuition plan is just another kind of a state 529 college savings incentives program. When it comes to a state pre-paid tuition plan, here is the basic gist of it. A state pre-paid tuition program, as the name implies, allows you to pay for your child’s tuition rates right now.

That means that you can, in essence, ‘lock in’ the current tuition rate. That way you will not be subject to the rising costs of tuition rates. This is a concern for many parents, who watch the current trend of rising tuition costs every year in despair.

Pre-paid Cons - Restrictions Abound with Pre-Paid Tuition Plans

Pre-paid tuition plans can come with associated restrictions, so make sure you understand them before you enroll. First, there is generally a firm age limit on state pre-paid tuition plans. Most state pre-paid tuition plans have a broad age limit that usually ranges from the time your child is a newborn to the time they are a senior in high school, but make sure to note the age limit when you are considering plans.

Also, there often restrictions on when you can enroll in your state’s pre-paid tuition plan. These pre-paid plans usually have special enrollment periods that mirror the enrollment period for insurance plans and the like.

Consult your state’s web site if you are not sure when to enroll. Furthermore, most state pre-paid tuition plans have restrictions on the types of expenses that they will cover. In most cases, state pre-paid investment plans will cover just that –state tuition and mandatory associated fees.

Considering a Traditional 529 Savings Plan? Pros You Can Live With

What about state 529 college savings incentives programs? Like most pre-paid college tuition programs, a state program allows you access too many federal tax incentives, including tax-free withdrawals, HOPE and Lifetime Learning tax credits, and other favorable federal tax credits. In general, a state 529 college savings incentives program allows you maximum flexibility. Most allow year-round enrollment and do not carry age limits.

Keeping Up With Inflation – Cons of the Traditional 529 Savings Plans

There are some cons associated with many state 529 college savings incentives programs. Some argue that while saving for college is good, some 529 savings plans may not be able to keep up with the growing trend of tuition increases. Like any type of investment, state 529 college savings incentives programs may simply lose their value over time.

The Lowdown On Prepaid vs Savings 529 College Savings Account

As costs keep mounting out of control trying to decide which plan to save for college is becoming harder and harder for every parent. Two savings plans have popped up recently that may help take the sting out of the high cost of college education for future students. The prepaid plan vs the 529 college savings plan. Which will work best for you is dependent on many different factors that we will look over.

Some things in common with both plans is you need to start young and that can't really be enforced enough with any kind of savings plan for college. The prepaid plan is where you buy tuition credits at today's rates and use them when your child is ready for school. This helps defray the costs for you. The biggest drawback in this program is you really don't know how many credits you are going to need.

This is dependent on what your child's major could be and also which college they decide to go to. Now you may also have to factor in that not every college will participate into the program. These are all things to consider before going with the prepaid route.

The 529 college savings plan is where you put into an account and let it grow over time. This is tax free and you can start this when they are real young and have a nice little sum waiting for the college student when they are ready. The biggest drawback with this play is the fees they charge for this. These fees are starting to get lower, but vary from state to state.

As Congress has stepped in and helped watch these programs they are getting better and are becoming more user friendly than ever before. At one time many of these prepaid and college savings plans were changing about every six months, which made picking a plan for your child almost impossible. So, which plan is best for your child? This will depend on many factors.

Costs are always going up and that will never change. Probably one of the first things to look is a two year or four year college. If the two-year college is in your child's future than probably the prepaid system may work best for you. Now if the four-year college is more to their liking than maybe the investment would work out a lot better.

Each case is different and it will take time and research to determine which is best. The other factors will include where you can get the best deal and how much you have to pay out is always something to consider. Different states have different plans and watch out for brokers who will try to sell you higher policies in other states. Do a little research and you could save a lot of money in the long run.

Don't be afraid to ask questions and get the answers you need. It's your money you’re spending and your child's education is one of the investments that will last a lifetime. Nothing is wrong with getting the best for your money. Prepaid or savings account is something you will need to decide and which one fits best into your budget.

Both plans are good, but have drawbacks that you will need to consider. No matter which one you choose though the money you save will be worth it as your child or grandchild will reap many benefits from your wise decision early in their life. Education is knowledge and as they know more they will earn more just a fact of life.

Quirks about Getting Education Loans Even with a 529 College Plan

Parents who are considering investing in a 529 college savings plan should be aware that there are some quirky rules about college savings, college loans, financial aid and parental financing for college that could impact the child’s ability to pay for college and should plan their financial investments accordingly.

Parents who are trying to figure out how to maximize their college investments for their child without losing money to some of the quirky college loan rules should be aware of several different factors that affect a child’s financial aid eligibility when applying for college.

When considering which type of 529 college savings plan to invest in, parents should keep in mind that some of the quirky rules about 529 plans and college loans that could cause confusion in the future and may even work against the student by limiting or reducing the amount of financial aid they are eligible to receive from the college or university they want to attend.

Pre-paid 529 plans can be tricky when it comes to taking out college loans in addition to having a pre-paid plan. Because pre-paid plans are paid to the school the money that is pre-paid is considered, for the purposes of financial aid, to be scholarship money and the student’s “need” figure is reduced by the amount of the pre-payment.

So while the pre-paid 529 account was set up to keep tuition costs low, it can mean that the student’s financial aid will be significantly lower than it would be without the pre-paid plan meaning that large college loans at high interest rates will be necessary to make up the shortfall in tuition costs.

Since eligibility for Federal college loans that have low interest rates and flexible repayment terms is based on both financial aid and need, having a pre-paid 529 means that most students and parents won’t qualify for the Federal college loans and will have to take out private loans from banks or other lenders that may not have interest rates that are as low or reasonable repayment terms.

While parents think they are doing the right thing investing in a pre-paid 529 college savings plan they may be doing more harm than good by using a pre-paid 529 plan to save for their child’s future college education.

Keep as much money as possible in the parents’ name. Money that is set aside in the child’s name, even in a 529 account, will directly impact the amount of financial aid that the student is eligible for. A student with a large amount of money in his or her name will not qualify for much financial aid, or large student loans, so keeping the investment in the parents’ name is the best way to invest money for college.

Parents’ contributions to the student’s education are considered when making financial aid decisions but not to the same extent as the amount of money that student has available for college that is in their own name. So in order to make sure that the child receives as much financial aid from the school as possible, keep the investment in the parents’ name, not the child’s.

Parents can expect some reduction in the amount of financial aid offered to their child if they have a 529 account, but it will be only a moderate reduction compared to the drastic reduction in financial aid that would occur if the 529 account was in the child’s name.

When planning for a child’s future it’s important to be aware of all the rules regarding college savings plans and how those investments might affect the child’s financial aid eligibility in the future. It’s always a smart idea to plan ahead for a child’s college education but make sure that the investments will help the child and not their chance at getting a high quality college education in the future.

Best States in Which to Fund your 529 Plan

What is a 529 plan, and how can it help your child achieve the best educational opportunities? Here is the skinny on what you need to know about a 529 college savings plan, including the best states in which to fund your 529 college savings plans.

What is a 529 College Savings Plan?

A 529 college savings plan is a special state-based college savings incentives program that helps you save money for your child’s college education. Not all states have a 529 college savings program that off the same kinds of benefits. Here are some things you should consider when you are choosing a 529 college savings plan.

Things to Consider When Choosing a 529 College Savings Plan

There are many important factors to consider when you are choosing a 529 college savings plan. First, you should consider the amount of time that your money will be invested.

You should consider your family’s tax bracket, how many (if any) fees and sale charges are associated with the plan, what kind of fees are involved, how much you will be investing, and what kind of state income tax deductions are allowed when you contribute. Pay close attention especially to fees. Even the slightest difference in percentage points will eventually add up.

Consider the State Tax Benefits

When choosing your 529 college savings plan, take into consideration your own state tax benefits. What kind of special tax benefits, if any, does your states 529 plan offer you? Does your state let you deduct all or part of your contribution on your state income tax form? This is something to consider.

What Kind of Costs are Associated with the Plan?

There are some plans that come loaded with high fees that will inevitably begin to eat into your returns. However, there are other plans with lower costs. Some analysts point to the plans managed by Vanguard and TIAA-CREF as those that have lower fees and costs.

Make sure you know exactly how much you will be paying in fees, including administrative costs, fund loads, management fees, and sales’ charges, both front-end and back-end. Ask for a list of all possible costs associated with the plan.

Consider the Different Investment Options

What kind of investment options are you looking for? Most state 529 plans offer different types of investment options. Decide what kind of investment style and performance you are comfortable with before you invest.

Who Has the Best 529 College Savings Plan?

Most analysts agree that it is a good idea to compare closely your own state’s 529 plans with the plans of at least two other states. Here are some things you should definitely consider when you are comparing different 529 college savings plans. First, consider what kind of state tax incentives will be available to you.

Does one state’s 529 plan offer tax-free withdrawals or special deductions? Is the plan generally affordable for you? What kind of investment performance has the plan shown in the past? Is the plan flexible enough for your needs? Does the plan offer low costs? These are all things to consider when you are finding the 529 state college savings plans that work best for your family.

Ranking the Best 529 College Savings Plans

Many analysts have ranked the best 529 college savings plans. In general, most analysts agree that the following states have some of the most desirable feature: Pennsylvania, Texas, South Dakota, Iowa, Virginia, Arkansas, Maryland, New Jersey, Nebraska, Florida, Utah, Hawaii, Illinois, and Louisiana.

Most analysts agree that most TIAA-CREF plans offer all-around desirable features. States with TIAA-CREF managed plans include New York, Idaho, Kentucky, Tennessee, California, Vermont, Georgia, Michigan, Connecticut, and Michigan.

Keeping Track of your 529 College Plan Contributions

There are several reasons that it’s important to keep track of your 529 college plan contributions. When investing in a pre-paid 529 college plan account overpayment means money that parents won’t be able to withdraw or to use if the student doesn’t need it or ends up not going to college.

When investing in a non pre-paid 529 college savings account it’s important to keep track of your investment contributions because that money may be subject to an income tax deduction in the state you live in.

This is important for any family member who is contributing to the child’s 529 college savings fund, and anyone in the family can contribute money to the college savings fund although the contribution may not be tax deductible in all states.

Keeping track of your contributions to a child’s 529 college savings account is also important so that you can keep track of how much money has been invested, if the investment is growing fast enough and what the rate of growth is. After all, that account is very important to the family because the child’s future education depends on it.

The money that parents or other family members contribute to a 529 college savings account is considered to be a gift and as a gift that money qualifies in the tax code as part of the annual $11,000 gift tax exclusion. So, any family member can contribute up to $11,000 annually without any taxes being applied to that money.

According to the current Federal gift tax law, parents and family members can give up to five years' worth of financial gifts, so a total of $55,000, in one year with no tax penalties, however that person would not be able to contribute any money to the account for four years following that year.

Making a large contribution makes a lot of sense whenever a parent or family member can afford it because the interest on such a large payment would accrue faster and in greater amounts than interest on smaller payments, even if there were lots of smaller payments made during the year.

If you have a personal banker or investment professional who takes care of the household’s investments make sure that the investment professional gives you a detailed accounting of all the contributions made to the non pre-paid 529 college savings account every quarter or every month and keeps you advised of important matters pertaining to the account.

The best way to make sure the investment is doing well is to monitor it yourself, but many people find investing confusing and prefer to leave their investments to be managed by a professional.

When tax time comes around, be sure to document all your contributions to the child’s 529 college savings program if your state allows tax deductions on that money to make sure that those deductions are applied to your taxes.

Keeping track of your 529 college plan contributions also means staying on top of the latest developments in the laws regarding 529 college savings plans. Make sure to stay on top of any changes in the laws regarding 529 college plans to make sure that you don’t end up losing money.

While a non pre-paid 529 college savings plan has a relatively moderate risk level, there is still some risk and it’s best to monitor the contributions and management of the 529 college savings plan closely to make sure that the investment is still performing well and growing under the asset company’s management.

Be sure to address any questions about the contributions to or the performance of the 529 college savings account to the asset management company chosen by the state to administer the account rather than to the state itself because the state is not involved in the direct management of the 529 college savings fund.

Learning about State Tax Deductions with 529 Plans

When planning ahead and investing in a college savings plan to make sure that money is available for a child’s college education it’s important to learn everything possible about the many different types of college savings plans and the different rules regarding taxation of those savings plans.

For parents, this information can be confusing but it’s very important to make sure that the investment is set up correctly and the best type of investment is chosen to make sure that the money the parents have to invest makes as much money as possible for the child’s education

Most parents end up investing in 529 college savings plans but the laws surrounding 529 college savings plans are complicated and can be different in each state since the 529 college savings programs are state run.

Learning about the state tax deductions allowed for 529 college savings plans is very important. The laws regarding taxes, tax deductions, and 529 college savings plan are different in every state, so parents should look for information regarding taxes and 529 college savings plans in the state where they live before investing.

Parents who invest in a 529 college savings plan that is not a pre-paid college savings plan are not eligible for a Federal tax deduction on the amount of that investment however investing in a 529 college savings plan does have some benefits because money invested in a 529 college savings plan is tax free, and deductions made from the 529 college savings account that are applied to educational costs are also tax free.

Some states offer parents a state income tax deduction on money that it is contributed to a 529 college savings account. Each state is different, but it’s easy to find information about 529 college savings plans and tax laws that are listed by state so that residents of each state can find out what the laws are where they live and what tax deductions, if any, they are entitled to when opening a non pre-paid 529 college savings account for their child.

In terms of taxes, the thing to watch out for when investing in a 529 college savings plan that is not a pre-paid 529 college savings plan is the penalties and tax fees for early withdrawal of that the investment money.

If parents withdraw the money from a non pre-paid 529 college savings plan account for any reason other than applying that money to specified higher education expenses there is a significant early withdrawal fee and tax penalty.

When the investment is withdrawn early and not used for educational purposes, the amount of money that withdrawn from the earnings portion of the 529 college savings account will become subject to state income tax plus an additional 10% tax on that portion of the investment.

There are a lot of rules and complicated issues when it comes to non pre-paid 529 college savings accounts and parents should make sure that they understand all the rules and the tax laws regarding 529 college savings accounts before they invest in a 529 college savings account to make sure that in the future they are not left in a situation where they didn’t put away enough money for their child’s education or end up paying heavy tax penalties and fees and end up without enough money to pay for their child’s education because they didn’t understand the tax laws regarding 529 college savings accounts when they first opened the account.

It’s more important than ever these days to put aside some money for a child’s education because college costs are skyrocketing every year. Be sure to invest wisely to make sure that the investment provides enough money for the child’s future college education.

Why Consider Out of State 529 Plans?

Why go out of state to shop for a 529 plan? Should you be considering other options? Let’s face it, not all state 529 plans are created equally. It is recommended that investors look at their home-state plans as a first option.

Some states have great incentives such as state tax deductions on contributions and matching grants. A poor 529 plan may wipe out the benefits such as deductions and grants. Look for a state tax deduction calculator on-line to determine the value of the benefits.

Make sure you find the plan with the lowest fees. Take a look at the Utah Educational Savings Plan Trust. With this plan you will find nine tried and true index and international offerings from Vanguard with a charge of only 0.38% per year for it’s most expensive option. You can compare this to Nebraska’s AIM College Savings Plan that has a heavier price of 1.35% to 1.61% with traditionally weaker funds.

Conservative investors should be aware of how much their state plans put into the stock market. The Michigan Education Savings Program is a good choice for the cautious investor. The plan even has a savings option, with no annual fee, that guarantees a minimum yearly interest rate and principal based on a Treasury note index. This plan also has portfolios of TIAA-CREF mutual funds that are more like bond funds than other 529 plans.

Look and see if your state 529 plan has the best portfolios of underlying funds. Compare it to plans like the Maryland College Investment Plan. They use a great blend of funds from T. Rowe Price. And the plan’s most expensive option costs just 0.98% annually.

Some people prefer to build their own portfolios. Look for a state that has a good mix of investment choices. For example, the College Savings Plan of Nebraska offers a selection of 20 funds including Vanguard, American Century and Fidelity funds.

In 2006, Kansas, Maine, and Pennsylvania all passed “tax parity” laws. This means that tax deductions are extended on contributions to residents who have invested in 529 plans from other states. This is unlike the other states that only extend state tax breaks to those who selected in-state plans. This tax parity law allows more flexibility to investors to select investments more suited to their wants and needs.

Look for a 5 Cap 529 program. States are rated on a scale of one to five. A 5 Cap program meets high standards in program flexibility, liquidity and availability of assets, strong ownership rights, state benefits, investment approach and safety, and program resources.

Three plans that have 5 Cap ratings and have been rated among the best 529 plans are the Maryland College Investment Plan, the Utah Educational Savings Plan and the Virginia College America Plan. Check them out to see how they compare to the plan in your home state.

All savings and prepaid plans are transferable to out-of state and private institutions. There will be no penalty if you have an out of state 529 plan if your child attends a local college. Your child will still be eligible for in-state tuition in the home state. They will still pay the lower tuition for Iowa students if you use the Nebraska plan.

It’s not advisable to flutter among 529 plans from state to state. Do your research or talk with a financial advisor. Pick the plan that makes the most sense for your family. Your state may very well have the plan that works best so why consider out of state 529 plans? Because it’s your money and you need to make sure it’s working hard for you!

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