Basic Questions Q What is a 529 Plan

Basic Questions Q: What is a 529 Plan? A: A 529 Plan helps families set aside money for their child’s future college cost. Q: Who can open a 529 Plan? A: Anyone! It’s never too early for a parent to start thinking about their child’s education! Even students can open them, however, if a student opens a prepaid tuition plan themselves there may be some restrictions. Q: Are 529 Plans only for my state’s public colleges? A: Nope! There are two types of 529 Plans; savings programs and prepaid programs. Savings programs let your child go to any college or university in our country. There are even some that allow foreign institutions! Prepaid programs usually are for in-state colleges. However, your contract can be changed if your child decides to go to a private or out-of-state college. http: //www. savingforcollege. com/intro_to_529 s/what-is-a-529 -plan. php

There is basically two types of 529 Plans, each one having their own special benefits. • Prepaid Tuition Plan: Tuition prices remain the same to certain colleges and universities • College Savings Plan: Covers tuition , fees, room/boarding, and books to any college or university in the United States. http: //money. howstuffworks. com/personal-finance/college-planning/financial-aid/5294. htm

http: //www. savingforcollege. com/intro_to_529 s/what-is-a-529 -plan. php

All 50 states have at least one kind of 529 Plan, other states may offer multiple plans. Certain Private colleges and universities offer their own Prepaid tuition plan. http: //www. savingforcollege. com/college_savings_201/

Basic Questions Q: What happens if the 529 Plan does not get used? A: Well, there will be a 10% penalty on earnings. Once it is payed, the account holder may do with the money as they please. Q: Are there gift and estate tax benefits for 529 Plans? A: Yes. The gift tax benefit lets the account owner give $13, 000 a year without paying tax. Whereas, in a state tax benefit, what you own leaves your estate but doesn't leave your control. For instance, if a person decides to later nullify the account, its value comes back into the persons estate. The account owner controls all of it. Q: Can people have 529 plans from multiple states? A: It is only necessary to have 529 Plans from only one or two states. However, people can open as many as they want from multiple states. http: //www. savingforcollege. com/intro_to_529 s/what-is-the-penalty-on-an-unused-529 -plan. php

A 529 Plan does affect financial aid. • If families have money put aside, then the financial aid will be reduced because the student has some money already going towards college. http: //www. savingforcollege. com/intro_to_529 s/name-the-top-7 -benefits-of-529 -plans. php

What questions should be asked before investing in a 529 Plan? • Is the plan available directly from the state or plan sponsor? • What fees are charged by the plan? • How much of my investments goes to paying the middle man (broker)? • What are the plan's withdrawal restrictions? • What type of investment options are offered by the plan? • Does the plan offer special benefits for state residents? • What limitations apply to the plan? • Who is the program manager? • Who are these people in charge of the plan? http: //www. sec. gov/investor/pubs/intro 529. htm

Basic Questions Q: How does investing in a 529 Plan affect federal and state income taxes? A: When people invest in a 529 plan, the money gained in their plan is not going to be taxed by the federal and state government as income. As long as the only money the people take out of their 529 Plan account goes directly to certain college costs under that plans. Q: What fees and expenses will I pay if I invest in a 529 Plan? A: A person choosing a prepaid tuition plan is charged enrollment fees in getting into the plan and administrative fees in order to maintain over time the person's individual plan. College savings plans also charge enrollment fees, yearly maintenance fees, and managing what you own fees in the plan. If a person purchases a plan from a middle man (broker) to a group plan under a bank or institution, there will be additional sales fees. http: //www. savingforcollege. com/intro_to_529 s/name-the-top-7 -benefits-of-529 -plans. php

There is a way to purchase a 529 Plan that can eliminate some of the additional fees. A person can purchase a 529 Plan and cut back on their extra fees by obtaining a direct-sold college savings plan. This type of college savings plan allows the person to buy directly from a program manager or plan's sponsor without any middle man (broker) in between the person and the plan itself. http: //www. sec. gov/investor/pubs/intro 529. htm

• The restrictions that apply toto anan investment in in aa • 529 plan are withdrawal restrictions. Each plan • has certain college expenses • that they will cover. Only • taking money outout forfor those • specific expenses will prevent • taxing oror penalty costs forfor • withdrawing any money from • other than what that plan • says Is Is anan okay expense toto pay. http: //www. sec. gov/investor/pubs/intro 529. htm

Basic Questions Q: From who do you buy a 529 Plan from? A: Someone can buy a 529 Plan through a 529 plan manager or a financial advisor. Q: How do you contribute to a 529 plan? A: People are allowed to deposit in the account over $300, 000 per beneficiary in many state plans. There is no income limitations or age restrictions. Q: Can you use the money in a 529 Plan only if you go to a state school? A: No, you can use it for both private or out-of-state colleges. Q: Can 529 Plans bought in one state be used in other states? Are there any restrictions? What are they? A: Yes, my choice of a school is not affected by the state that your 529 savings plan is from. Withdrawal restrictions apply to both college savings plans and pre-paid tuition plans. Limited investment options and are not permitted to switch freely among available investment options (can only change her own investment option one time per year. http: //www. savingforcollege. com/intro_to_529 s/what-is-a-529 -plan. php

The best 529 Plan available are determined by a person's circumstances and their goals. If someone wants to know their options they are welcome to go on College. com to learn more. http: //money. howstuffworks. com/personal-finance/college-planning/financial-aid/52911. htm