2009's Best and Worst 529 Plans - Morningstar Advisor.
I am a proponent of 529 plans. They offer several advantages over competing options such as taxable investment accounts, UTMAs and UGMAs and alternative financing options. First, tax deferral of investment gains can help the account balance increase more quickly than taxable accounts. Second, ownership of the 529 remains with the account holder (most often the parent) and that provides greater flexibility of use relative to UTMAs and UGMAs. Third, as the assets in the 529 are considered those of the parents for FAFSA purposes, they have less impact on financial aid calculations than UTMAs and UGMAs.
It is important to remind yourself of the purpose of the 529, that is, to pay for educational expenses for the beneficiary. Don't be aggressive when choosing the age based portfolio - ie choosing a 7 to 9 year old portfolio which will be heavily in equities for a 15 year old child, in an effort to play catch-up or to get ahead. Choose the portfolio that fits the beneficiary age best. You still have risk because of the long-only nature of the portfolios, don't take on more than necessary (one of the commandments of investing).
I am a proponent of 529 plans. They offer several advantages over competing options such as taxable investment accounts, UTMAs and UGMAs and alternative financing options. First, tax deferral of investment gains can help the account balance increase more quickly than taxable accounts. Second, ownership of the 529 remains with the account holder (most often the parent) and that provides greater flexibility of use relative to UTMAs and UGMAs. Third, as the assets in the 529 are considered those of the parents for FAFSA purposes, they have less impact on financial aid calculations than UTMAs and UGMAs.
It is important to remind yourself of the purpose of the 529, that is, to pay for educational expenses for the beneficiary. Don't be aggressive when choosing the age based portfolio - ie choosing a 7 to 9 year old portfolio which will be heavily in equities for a 15 year old child, in an effort to play catch-up or to get ahead. Choose the portfolio that fits the beneficiary age best. You still have risk because of the long-only nature of the portfolios, don't take on more than necessary (one of the commandments of investing).
