| If you're like most parents, saving for your children's | | | | PlanAll plans are sponsored by individual states, but are |
| college education is a priority and a big challenge. | | | | typically available to residents of other states. Some |
| Tuition and related costs at both public and private | | | | states offer residents a state income tax deduction |
| universities have been rising at 5% per year or more, | | | | for contributions to their own plan. So, for residents of |
| far exceeding the rate of inflation. To put that into | | | | these states, that is the way to go. For those without |
| perspective, a child born in 2006 should plan on | | | | that tax incentive or residents of states without an |
| $110,000 in total expenses for four years at the | | | | income tax, you can choose from just about any of |
| average in-state public college; $300,000 for four years | | | | the available plans.Be aware that many 529 plans are |
| at a private university.Financing these costs for one or | | | | heavily promoted by brokerages and other financial |
| more children is going to take planning and, most | | | | institutions and can carry large and completely |
| importantly, disciplined savings. Tax-advantaged "529" | | | | unnecessary sales charges. Go with a plan with no |
| College Savings plans are the savings vehicle of | | | | sales or other load charges. Typical annual fees for |
| choice and offer important advantages over other | | | | asset and account management combined should be |
| options. A $3,000 annual contribution, beginning at birth, | | | | 1% or less.Recommended 529 PlansThere are at least |
| to a growth-oriented 529 plan should pay for one | | | | a dozen excellent options to choose from. Among |
| child's in-state public education, and a $7,500 annual | | | | these, we like the TIAA CREF-managed plans |
| contribution for a four-year private education. A later | | | | (California and others) and the Vanguard-managed |
| start means higher annual contribution amounts.529 | | | | plans in Iowa, Nevada, New York and Utah. The |
| Plan Advantages- Large Tax-Free Contributions: | | | | Vanguard plans, with their index investment strategies, |
| Parents, grandparents, other relatives and even friends | | | | have operating costs of less than 0.75%. A new entry |
| can contribute up to $12,000 per year per child, | | | | is the Alaska plan managed by T Rowe Price. It offers |
| tax-free, to a 529 plan.- Tax-Free Earnings and | | | | a choice of first-rate actively-managed funds and at |
| Distributions: All earnings in a 529 plan are tax-free. | | | | relatively low cost.No matter which plan you choose, |
| Distributions are free from all federal income and most | | | | we strongly recommend an "age-based" investment |
| state income taxes when used for tuition or other | | | | strategy. These strategies range from Conservative |
| qualified college expenses. This makes 529 plans as | | | | to Aggressive. Age-based programs are dynamic |
| powerful as Roth IRAs for long-term savings.- Donors | | | | asset allocation programs, similar to Target Retirement |
| (parents, grandparents, etc.) "own" the 529 assets: | | | | date funds. They are heavily invested in stocks when |
| Unlike a custodial account that typically becomes the | | | | your child is young, gradually converting to more |
| minor's property at age 18, 529 plan assets are always | | | | fixed-income and cash as college age approaches. |
| under the control of the donor.- 529 plan assets are | | | | This approach protects against the risk of a major |
| more advantageous for financial aid considerations: | | | | stock market downturn just as the funds are |
| Plan assets are counted at a 5.5% rate by college | | | | needed.With over 31 years of investment experience, |
| financial aid offices, compared to the 35% rate used | | | | Martin Weil, Registered Investment Advisor and |
| for custodial account assets.- Unused funds in a 529 | | | | Principal of MW Investment Strategy Group, helps |
| can be rolled over to another child's benefit.Have I | | | | busy professionals and their families achieve their |
| caught your attention? Now the question is which 529 | | | | long-term financial goals. |
| Plan is best for you and your children?Choosing a 529 | | | | |