College is expensive. Most parents are trying to figure out how they’re going to pay for it after their child leaves high school. A my529 savings plan could help ease some of that burden. It offers a way for parents to save for their child’s future without being hit with taxes when they draw it out, as long as it is used for qualified educational expenses.
“It’s an important piece to a family’s overall financial plan to save for college,” said Richard Ellis, my529 executive director and CEO. “By saving at an early age, it teaches children the value of money and that you don’t just get it by osmosis.”
Start young with an allowance and talk about what it costs to go to college, he said. “Show them there are options to go to a trade school or get a four-year degree. Prepare the path from preschool to high school and beyond, and help them understand how to get there. My529 is part of that planning.”
It’s one of only two gold-rated plans in the country, said Ellis. “It’s a good investment option. You can decide what you want your risk tolerance to be and adjust it as your child gets older.”
There are no minimum requirements for what has to be put into the account, he said. “It’s whatever works for your family. It’s that much less you have to borrow or get a loan for; that’s why it’s important to start as early as possible to allow for growth and build those funds. The more you put it off, the less you’ll have. You should start when they’re a baby.”
Account holders must be 18 or older, Ellis said. “You can open an account online (my529.org) or get a form from the website and mail it in. You’ll need your Social Security number and the beneficiary’s Social Security number too, and have an address in the U.S.”
Ellis said the website also has investment options. “You can see the breakout and select the investments you want. You can make an initial contribution and then have it come out monthly from your pay after taxes.”
Friends and family can also contribute, he said. “They can gift it to that account. My family has already gone through the first generation. They’ve all graduated, so I rolled it over and changed the beneficiary to my grandson.”
There’s an online form to fill out to change the beneficiary, Ellis said. “It has to go to a family member. It can be a niece or a nephew – there’s a broad definition.”
Ellis said there’s a new option to roll it over into a Roth. “The limit is $7,000 a year with a $35,000 maximum, as long as they have the income to contribute.”
The funds for a my529 account don’t have to be used at a Utah school, he said. “Any eligible institution that qualifies for student aid. It’s not just for four-year institutions. It can be a two-year college or applied technology centers like Davis Tech. There are a lot of opportunities. College is not for everyone. This is flexible to meet all of
those needs.”
Qualified education expenses are more than just tuition, said Ellis. “It can be for fees, books and supplies, room and board, a computer or Internet service, etc. There are a lot of expenses. A scholarship doesn’t always cover everything.”
Ellis said my529 has 500,000 accounts. “We have account owners in all 50 states and the District of Columbia. It’s amazing to watch it grow. We must have done something right.”
Start saving now, he said. “You’ll have more time on your side so that it can grow over the course of 18 years. Even if all you do is invest small amounts, every little bit helps.”
For more information about my529 or to open an account, go to my529.org.