Episode 170: The Case for 529 Plans for College Savings with Ann Garcia

In this episode Melissa Joy, CFP, ® and Ann Garcia, CFP®, a financial advisor and author of the popular College Financial Lady blog, discuss why a 529 plan is a great vehicle for college savings. They cover everything from asset weighting on the FAFSA form, flexibility on what colleges your child can attend, and how they help maximize tax savings. Did you know if your 529 is overfunded because your student got a scholarship, you don’t pay the penalty on withdrawals of the amount that is overfunded due to the scholarship, only taxes on the gain?   If you have a child who may attend college some day, this is a must listen episode to help plan financially.

You will learn:    

The benefits of 529 plans and why they are an excellent option for funding higher education.Explanation of what 529 plans are and how they differ from other college savings options.Tax advantages of 529 plans, including tax-free growth and potential state tax deductions/credits.Flexibility of 529 plans, allowing for changes in beneficiaries within the family and use for K-12 tuition.Importance of earmarking funds specifically for college to maintain focus on savings goals and eligibility for financial aid.How assets are weighted on the FAFSA, with 529 plans being treated as a parental asset with a maximum of 5.64% factored into the EFC.Encouragement to start saving for college early to benefit from compounding and time.

Resources:

Learn more about Ann Garcia and The College Financial Lady. Find out about Pearl Planning. Read 529 Plans: How to Get Money Out.Listen to Episode 132: Paying For College with Ann Garcia.List of documents you will need to fill out the FAFSA, FAFSA Resources by the College Financial Lady. Sign up for the College Financial Plan Masterclass course HERE.Read Ann's Book, How to Pay for College.

Links are being provided for information purposes only. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Pearl Planning cannot guarantee that the information herein is accurate, complete, or timely. Pearl Planning makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Pearl Planning financial advisors do not render advice on tax matters. You should discuss any tax matters with the appropriate professional.

Data Sources: Capital Group, RIMES, Standard & Poor's.