We were just blessed with the birth of a darling granddaughter. We would like to help pay her college tuition and have heard of a number of different savings plans, including the 529 plan, but it seems to have a number of confusing variations depending on the state you live in.
I’m hoping other Boomers can offer advice about which is the best tuition savings plan.
Top-pop, we are also looking for an investment plan to help pay for our grandson’s education. A friend referred me to 3websites that you may also find helpful. http://www.collegesavings.org/ has good answers to questions and offers a number of different links to state plans. http://www.savingforcollege.com/ is a fairly easy-to-comprehend overview and specifically addresses questions grandparents commonly ask. Also http://morningstar.com/ compares different 529 plans, rating them on a number of different factors.
We recommend AmericaFunds 529. You live in Virginia, so you would get a deduction for your contribution. They remain under your control but out of your estate for estate tax planning. We recommend these for our out of state clients also as they are better maanged and have very low fees.
Since their creation 1996, 529 plans have become to college savings what401(k) plans are to retirement savings--an indispensable tool for helping you amass money for your child's or grandchild's college education. That's because 529 plans offer a unique combination of benefits unmatched in the college savings world: availability to people of all income levels, professional money management, high maximum contribution limits, and generous tax advantages.
You’re right – there are many variations of the 529 plan based on what state you call home, but as others who have responded concur, it is still probably the best option for saving for your granddaughter’s college education.
Check out this ratings page on FinAid.org (http://www.finaid.org/savings/529ratings.phtml) to help narrow down what the best plan would be (information is given for residents and non-residents alike) and provide specifics on costs, state tax benefits and investment options.
You’ll also find ratings and recommendations from other financial institutions on these plans. Another benefit: you can withdraw from the account and use funds at any higher education institution where federal student aid is offered, even if the state sponsoring the 529 is not the state where your granddaughter attends school (according to SavingforCollege.com).
Other options (with a tax advantage) for helping build your granddaughter’s college fund: prepaid tuition plans, Coverdell education savings accounts, and Series I/certain Series EE savings bonds (Source: FinAid.org).
What a wonderful gift to bestow on your granddaughter!
- Submitted by Boomerater Staff
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