| Author |
Message |
    
lseltzer
Citizen
Username: Lseltzer
Post Number: 1702
Registered: 5-2001
| | Posted on Saturday, September 13, 2003 - 1:00 pm: | 
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Thanks to the return of search I found last year's thread on 529 College Savings Plans, but it didn't really answer everything for me.
I understand these plans are good and that I want one. I just can't decide which one to buy into. I know about savingforcollege.com and collegesavings.org, but every time I look at them I see a dozen things to consider and that's too many variables for me to track. Plus it looks like in many states there are "state-run" plans and broker plans. What's the difference?
I'm also curious: Is there a limit to how much money I can initially contribute? Is it less tax-advantageous to contribute from existing savings as opposed to current earnings?
Since that last thead, TIAA-CREF is no longer the NY fund manager. Is the NY fund less desirable now? Is the NJ fund (Franklin Templeton I think) still uncool? |
1-2many
Citizen
Username: Wbg69
Post Number: 336
Registered: 6-2002
| | Posted on Sunday, September 14, 2003 - 2:07 pm: |
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one thing I learned recently is that amounts held in 529 plans are considered the student's savings, and are thus subject to a much higher percentage calculation of contribution when "need" is calculated for financial aid purposes. thus, your own savings of, say, $20,000 will be subject to a contribution expectation (under the "need" analysis) of a very low percentage (I recall something around 5 - 10%), while a 529 plan is subject to a much higher contribution expectation (40% - ?).
I am a little worried about skewing the "need" analysis, and wonder if anyone here has any experience with this.
while my calculated "need" may be $0 if my daughter attends Rutgers, at $18k/year presently, and I understand and accept that, I would hope the calculations would show that I have a financial aid "need" if she decides to go to Duke, at $38k/year presently. I don't have that kind of cash lying around, and want to ensure that the financial aid calculations aren't skewed by savings in a 529 versus parental holdings, so it looks like we do. additionally, it is my understanding that federally-guaranteed (lowest-rate) student loans are only available for the "need" determined by the financial aid calculations - but perhaps this is incorrect.
any input is appreciated. |
OK, it's Tom Reingold
Citizen
Username: Noglider
Post Number: 507
Registered: 1-2003
| | Posted on Sunday, September 14, 2003 - 5:00 pm: |
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I heard that the tax-free status of 529 plans runs out in 2010. This affects many children! Is this true?!
Tom Reingold
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lseltzer
Citizen
Username: Lseltzer
Post Number: 1705
Registered: 5-2001
| | Posted on Sunday, September 14, 2003 - 7:48 pm: |
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Tom - yes, so you have to ask if it's possible that Congress would actually not renew it. |
OK, it's Tom Reingold
Citizen
Username: Noglider
Post Number: 509
Registered: 1-2003
| | Posted on Tuesday, September 16, 2003 - 1:25 pm: |
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There are so many sunset clauses in the recent tax changes that there's no way they can afford to maintain all the tax breaks. The question is, which will they keep? Each would be politically suicidal to get rid of, but it's just not possible to keep all of them. So I can't assume that 529's will be around forever, if that's your implication.
Tom Reingold
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xavier67
Citizen
Username: Xavier67
Post Number: 249
Registered: 6-2002
| | Posted on Tuesday, September 16, 2003 - 2:33 pm: |
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Here's the Kiplinger site that compares all the state plans:
http://www.kiplinger.com/tools/managing/college/savings/2001/states01.html
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bak
Citizen
Username: Bak
Post Number: 359
Registered: 5-2001
| | Posted on Thursday, September 18, 2003 - 1:05 pm: |
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This author weeds through most plans as they exist today and highlights five (5) plans that she believes to be best: http://moneycentral.msn.com/content/CollegeandFamily/Savingforcollege/P59845.asp |
Phil
Citizen
Username: Barleyrooty
Post Number: 696
Registered: 5-2001
| | Posted on Thursday, September 18, 2003 - 11:14 pm: |
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I would strongly recommend you pick one of the low fee plans. Fees will take a large part of your investment performance over time if you don't. The five mentioned in the moneycentral article above all look OK and provide a variety of options. Vanguard has been the market leader in low fee index funds for a long time and would be my first choice. Yes, there are limits to how much you can contribute - I believe it's the standard $11k gift tax limit, but you can count it once each for you and your wife and you can put in 5 years worth in one go so that gives you an initial limit of $110,000. (You can also have grandparents give too - good way to avoid some inheritance tax.)
Of course you should always read the plan prospectus carefully. I would recommend avoiding entering one of these plans through a financial planner or broker as they take huge commissions for basically filling in one simple form that you can download from the internet and fill in yourself. There's no benefit to choosing the NJ plan over one of the lower fee plans.
Enjoy! Phil
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C Bataille
Citizen
Username: Nakaille
Post Number: 1557
Registered: 5-2001
| | Posted on Friday, September 19, 2003 - 11:56 am: |
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I think one of the down sides to the NJ plan is that it requires you to go through a broker.
Cathy |
davel
Citizen
Username: Davel
Post Number: 92
Registered: 6-2001
| | Posted on Monday, September 22, 2003 - 4:05 pm: |
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The management of the NY College Savings Program is in the process of being taken over by Upromise investments with investment options with the Vanguard Group and Fleet Bank. The following is from
http://www.nysaves.com/
"As of July 30, 2003, TIAA’s contract with New York’s Higher Education Services Corporation (HESC) and the Office of the State Comptroller (OSC) to manage New York’s College Savings Program expires. HESC and OSC have advised that Upromise Investments, Inc. has been selected as the new Program Manager, subject to successful completion of contract negotiations with Upromise Investments, Inc. The Upromise group will include the Vanguard Group and Fleet Bank’s Columbia Management Group." |
margu
Citizen
Username: Margu
Post Number: 15
Registered: 6-2002
| | Posted on Wednesday, September 24, 2003 - 12:38 pm: |
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As of March 17th, 2003 Franklin Templeton (mutual fund investors) handles the NJ plan. It's no longer handled directly by the State. Will that be a good thing or not?? More information added to the pot of stew. |
bobk
Supporter
Username: Bobk
Post Number: 3436
Registered: 5-2001
| | Posted on Wednesday, September 24, 2003 - 1:01 pm: |
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There is an article in today's Wall Street Journal on this subject. |
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