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(Complete Show Notes Below)
In the 41st episode of the Financial Procast:
Are 529 College Savings Plans a Good Idea?
Generally speaking we're not in love with the 529 savings plans. They seem like a great idea in theory but in practice they're a bit less than appealing. Most people who've bought into the idea, find that the plans are somewhat restrictive and require too many limitations as to how the money saved within the plan can be spent.
Not to mention that many of the plans are less than stellar when it comes to investment performance. A decent resource for all things related to the various 529 college savings plans available in all the states is over at savingforcollege.com. There you can search for information on any state's particular plan, find out who runs the plan and see some various metrics as to how the plans are rated.
Remember that you really have to make significant contributions to 529 plans for them to work well, the earnings are tax deferred and can be spent without any tax implication if they are used for qualified educational expenses. If there is no substantial gain in your plan, you've not really garnered any advantage at all. And be aware that most plans have thus yielded what most would consider sub-par investment performance.
Thanks a lot of this info. It’s good to know these so that one will know their options when it comes to college savings.