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