MD 529 plans

[watercolor]

Hey there everyone!

I am curious about a 529 plan for skeeter. I have a upromise acct for her and got an email today that stated that it would be a good idea to go after a 529 plan. I was planning on doing this anyway, however here are just a few questions as I am lost to even know where to start.

1) What is the best one to use? Meaning is there a brand or a service that is better than the other? I saw one that was Vanguard, another that was collegesavings.com (or something like that). I googled it- but so much came up that it was a little overwhelming. What do you use?

2) As far as our taxes, do we just get a statement in the mail that we would provide to our accountant? Are there any tax benefits when it comes to do this?

3) Do you have to put a set amount in every month? Can you put more/less than that set amount every month? I assume there are no penalties (which I dont understand either. I am completely new to this)

4) Someone had told me to bypass the 529 and put it into a high interest stock... is this better? Wouldnt that be risky because of the economy? Just asking.

Thanks so much in advance. I am sure I will have a ton more questions with those who answer.

 

[Busterduck]

Hey there everyone!

I am curious about a 529 plan for skeeter. I have a upromise acct for her and got an email today that stated that it would be a good idea to go after a 529 plan. I was planning on doing this anyway, however here are just a few questions as I am lost to even know where to start.

1) What is the best one to use? Meaning is there a brand or a service that is better than the other? I saw one that was Vanguard, another that was collegesavings.com (or something like that). I googled it- but so much came up that it was a little overwhelming. What do you use?

2) As far as our taxes, do we just get a statement in the mail that we would provide to our accountant? Are there any tax benefits when it comes to do this?

3) Do you have to put a set amount in every month? Can you put more/less than that set amount every month? I assume there are no penalties (which I dont understand either. I am completely new to this)

4) Someone had told me to bypass the 529 and put it into a high interest stock... is this better? Wouldnt that be risky because of the economy? Just asking.

Thanks so much in advance. I am sure I will have a ton more questions with those who answer.

I have two 529 plans for my children. I opened the account when they were born and put a sum of money each month in each. I have mine invested in bonds. They take the money out of my bank account each month automatically. You can put more or less each month if you like. I find it easier to just set an amount and forget it.

As for tax advantages, we get quartly statements but no final statment at the end of the year. You can deduct the amount you put in the 529 plan, up to a certain amount (2,500 per child, I think it was), from your State taxes ONLY. You can not deduct it from Federal Taxes. I was a little disappointed in that.

All in all, it is a good plan. You can only withdraw money for educational expenses. I feel comforted knowing that my 3 year old already has thousands saved for his college education. I would, personally, stay away from high interest stock because it is too risky. As for upromise, I found it worthless. I think I have had the account now for 6 years and may have less than 5 dollars in that account. I hope you are better off than me.

 

[jsouthan]

I have two 529 plans for my children. I opened the account when they were born and put a sum of money each month in each. I have mine invested in bonds. They take the money out of my bank account each month automatically. You can put more or less each month if you like. I find it easier to just set an amount and forget it.

As for tax advantages, we get quartly statements but no final statment at the end of the year. You can deduct the amount you put in the 529 plan, up to a certain amount (2,500 per child, I think it was), from your State taxes ONLY. You can not deduct it from Federal Taxes. I was a little disappointed in that.

All in all, it is a good plan. You can only withdraw money for educational expenses. I feel comforted knowing that my 3 year old already has thousands saved for his college education. I would, personally, stay away from high interest stock because it is too risky. As for upromise, I found it worthless. I think I have had the account now for 6 years and may have less than 5 dollars in that account. I hope you are better off than me.

It is my understanding that you can deduct your deposits if you are enrolled in the MD 529 plan. There is nothing that stops you from enrolling in other plans, but you won't have any tax benefit. Also, you can deduct any deposit made to the account (whether it was by you or not) up to the limit.

Also, it is true that it can only be used for educational purposes, but if child #1 is lucky enough to get scholarships, then you can roll it over to another child and use it for him. If you don't end up using it, you can withdraw it, but I believe there are pretty stiff fines for it.

Here is the link for the MD plan: College Savings Plans of Maryland | Section 529 Plan. It is the "College Savings Trust", not the prepaid one. The advice when we opened one was that you would get a better return on the 529 than if you did the prepaid (with this one you pay today's tuition rate for an in-state school, so you are protected against any rate increases). Of course, there would be an additional risk if your kid didn't attend a state school.

 

[watercolor]

Has anyone heard of an ESA? I was talking to others about this after I posted it- and I was told to go the route of an ESA for the fact that 529's can change their rate of savings when they hit a certain age. Is that true?