What’s keeping you from opening a 529 Plan to invest for college? Think there are too many restrictions and high minimum investments? Think again.
Don’t let common myths hold you back from an important part of investment planning. Read on to learn if your “hold-ups” hold water.
Myth 1: It costs a lot to open and maintain an account
Fact: Most plans have low minimums. Some require only $25 or even less, if you’re contributing through payroll direct deposit or an Automatic Investment Plan (AIP).1 To help families save more, some plans offer matching grants, rewards programs, or gifting services that let others make gift contributions.
Myth 2: If your child doesn’t go to college, you lose your money
Fact: Unlike other college savings options, a 529 Plan account owner controls the account. That means you can change your beneficiary to another eligible “member of the family” (as per plan rules) with no tax penalty.2
Myth 3: You have to make a lot of investment decisions
Fact: Whether you prefer a one-step or do-it-yourself strategy, 529 Plans generally offer several investment types that can meet your needs. The one-step strategy is an age-based option where the investment becomes more conservative as the beneficiary gets closer to college age. The do-it-yourself strategy offers a range of individual portfolios that allow you to create your own investment plan.
Myth 4: A 529 Plan is only for schools in your home state
Fact: You can use the assets at any eligible school around the country and abroad. That includes 2- and 4-year colleges, graduate schools (including law and medical), and vocational/technical schools.3
Myth 5: You can only use 529 Plans to pay for tuition
Fact: You can use your account assets for many higher education expenses, including tuition, fees, and certain room and board costs.4
Myth 6: I make too much money for a 529 Plan account
Fact: There are no income limitations for a 529 Plan.
Myth 7: It’s too late to start a 529 Plan
Fact: It’s never too late. Even if your student is in high school or you are planning to enroll in classes soon, you can still take advantage of the tax benefits of a 529 Plan. In addition, the more you manage to save now, the less you will have to borrow later.
Myth 8: A 529 Plan is only for kids
Fact: Are you considering career retraining or an advanced degree? There’s no maximum age for a 529 Plan. As long as your school is eligible, you can use your 529 Plan assets—even if you’re not attending full-time.
The fact is—529 Plans are a great way to invest for college. Learn how the benefits of a 529 Plan can help make your student’s college dreams come true.
1 A plan of regular investment cannot assure a profit or protect against a loss in a declining market.
2 The availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
3 An eligible institution is one that can participate in federal financial aid programs.
4 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.