529s plans. plan ahead for your kids?

[NuTs62]

I don't know if this is considered a deal or not but...

http://www.upromise.com

Similar to 401K plans for retirement, 529S plans are for college. Not sure exactly how it works, but if you have kids, and you wanna start saving up, maybe you can look into it? Make purchases at various places, and get percentages back that goes into the fund. You can even sign up for a credit card that will give you 1% that goes into the fund.

What do you guys think? good idea?

[asker]

529 Plans were discussed in a money management seminar I went to 2 weeks ago. I don't know about upromise.com but from the seminar I gather that you don't even have to have kids to open one. You or spouse may go back to school/maybe not. Also, depending on state you're in, great tax breaks... I'll check out the upromise site.

[RoniMan]

ok, i don't know about what that site is talking about. i'm in financial services, and that's not what 529's about.

529 = investment for higher education with tax deferred growth (like 401), and tax advantaged access for higher education costs (not like 401).
higher education = any accredited university/college.
who is eligible? = anyone
additional benefits = beneficiary is transferrable, and higher max contributions than ed IRA
things to look out for = affects financial aid

for more info: contact someone who knows about this to get better idea.

[SporkPork]

the real benefit is that the money is taxed after your transfer it to your kid. this means that it is taxed at the kids tax bracket and not yours.

[Thorin78]

I'm 23 and I've got an account with Upromise. It'll be years before I get married and have children. But it'll take a really really long time before you save enough to pay for college. Unless you buy alot of stuff every year.

[NuTs62]

Originally posted by Thorin78
I'm 23 and I've got an account with Upromise. It'll be years before I get married and have children. But it'll take a really really long time before you save enough to pay for college. Unless you buy alot of stuff every year.

True, but considering the way people here at G|A spend, for many, it may be a good idea. But I don't know enough about it to be saying anything so :)

[kantonburg]

My only concern with 529 is that the bill only runs to the year 2010. After that if congress doesn't extend the bill the 529 tax goes back to the old way of taxing the withdraw of the money for college prior Jan 1, 2001.

529 is a good plan lets just hope it gets extended. There is information on the on the Upromise site.

[Thorin78]

While I'm a G|Aer. I don't spend that much because of this place since I have no money to spend :(. Mortgage payments kill. But anyways, we don't even know if upromise will still be here by 2010. Wish that to be true first I'd say.

[caribiner23]

The thing about Upromise's "savings calculator" page is that the numbers seem pretty inflated. If you plug in more realistic numbers you'll see that it's a deal, but not as phenomenal as they would have you believe. Can't say "no" to free money.
:)

For you G|A Illinois residents, you can start a 529 through the state at: www.brightstartsavings.com

[whitak24]

Originally posted by kantonburg
My only concern with 529 is that the bill only runs to the year 2010. After that if congress doesn't extend the bill the 529 tax goes back to the old way of taxing the withdraw of the money for college prior Jan 1, 2001.

529 is a good plan lets just hope it gets extended. There is information on the on the Upromise site.
while it is possible that the tax-preferred status of the 529s could end in 2010, it is highly unlikely.

basically, once people have already gotten into a program, congress is typically VERY hesitant to make any changes. you might not be able to open NEW accounts after 2010, but almost certainly, the tax status of existing 529s will be grandfathered in.

in short, if you start an account with a certain status, you will probably be allowed to keep that account under the same status. at least, that's what my financial planner tells me.

[Chgoman]

That's correct. Generally speaking, if they were to close of 529 plans in 2010 they wouldn't change the tax status of the plans. They would just not allow any further contributions to the plan.

[kantonburg]

Originally posted by whitak24

while it is possible that the tax-preferred status of the 529s could end in 2010, it is highly unlikely.

basically, once people have already gotten into a program, congress is typically VERY hesitant to make any changes. you might not be able to open NEW accounts after 2010, but almost certainly, the tax status of existing 529s will be grandfathered in.

in short, if you start an account with a certain status, you will probably be allowed to keep that account under the same status. at least, that's what my financial planner tells me.

Probably is the only key word in there that concerns me. :)

I'm sure you are right but I'd like to see something in writing.