Dunnan on Dollars Personal Finance Tips from Nancy Dunnan College 529 Savings Plans
October 9, 2009 - If you've been rattled by the recession and stock market losses and at the same time you're trying to save for your child's college education, here's a possible solution. You won't make a lot of money but then again, you won't lose money either. A handful of state sponsored 529 college accounts are now offering an option beyond stocks, bonds and mutual funds - they've added savings accounts and/or bank certificates of deposit to the investment menu. Both come with FDIC insurance. That means insurance coverage for up to $250,000. Parents are not required to be a resident in order to invest in a state's 529 plan. However, a number of states do offer tax breaks and lower fees for residents. Here are four plans that offer these safe choices: (1) College Savings Bank (www.collegesavings.com) has conventional fixed-rate CDs in both Arizona's and Montana's plans as well as CDs with returns linked to the S&P 500 Index and the rate of inflation. (2) Ohio CollegeAdvantage (www.collegeadvantage.com) has several savings accounts and CD options. The CDs range from three months to 12 years. (3) Utah Educational Savings Plan (www.uesp.org) also offers CDs. There's no minimum contribution required in order to open this state's account. (4) Virginia College Savings Plan (www.virginia529.com) has several insured savings accounts.
The Advantages In general... - The money in a 529 Plan grows tax deferred.
- Withdrawals for approved college costs are free of federal taxes and in some states from state taxes.
- Parents can retain control the account.
- Very few plans have income or age restrictions.
The best source for details, including ratings of individual state plans and a list of low-fee programs, is: www.SavingForCollege.com. - Nancy Dunnan
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