In this very special guest-hosted Money Hacks, financial planner, Jason Dahl takes over. In this Money Hacks episode, Jason dives deep into education planning and specifically 529 plans. There are two types of 529 plans: college savings plans and prepaid tuition plans. College savings plans allow you to invest contributions to withdraw in the future for qualified education expenses, while prepaid tuition plans allow you to purchase college credits at today's prices to be used in the future. Today we are focused on the college savings plan.
With the many options available, it's important to consult your financial advisor to discuss your needs and learn how the right 529 plan can help you achieve the education savings goals for your desired beneficiary.
Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode? Email us here!
The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax-free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.
