What are the advantages in investing in a 529 college plan at the age of 35?
I read an article from Kiplinger’s Personal Finance (2/2008) and it said that by the age of 35 we should invest in a 529 college savings plan. What is the advantage of doing this? They did not specify if this was for me or for the kids so I am kinda curious on what you guys think.
It can be for either you or the kids. The money will grow Federal Tax free. Some states offer state tax free for investments. It is a Post Tax money investment. You can transfer the account to other family members as you wish and it has much higher income limit and contribution limit. It will count against the beneficiary’s financial aid eligibility. Of course, it is assumed that the beneficiary is going to pursuit higher education.
Categories: Personal Finance Articles 529 College Savings, 529 Plan, Advantage, Beneficiary, College Savings Plan, Contribution Limit, Family Members, Financial Aid Eligibility, Higher Education, Invest, investing, Investments, Kids Money, Kiplinger, Money Investment, Personal Finance, State Tax, Tax Money
It’s senseless to invest in a 529 plan unless the beneficiary expects to go to college. Generally that means the beneficiary is your child, although there are other situations where it might be useful. If you don’t use the withdrawals from the 529 plan on qualified educational expenses, you will owe taxes and a penalty, thereby negating the value of the tax deferral.
So I gather that the Kiplinger article is directed at parents of minor children, although it certainly is odd that they emphasize the parent’s age rather than the child’s.
References :
It can be for either you or the kids. The money will grow Federal Tax free. Some states offer state tax free for investments. It is a Post Tax money investment. You can transfer the account to other family members as you wish and it has much higher income limit and contribution limit. It will count against the beneficiary’s financial aid eligibility. Of course, it is assumed that the beneficiary is going to pursuit higher education.
References :
http://www.savingforcollege.com/compare_529_plans/index.php?page=select_plans&plan_type_id=