What you may not know about 529 plans

by Grace

Adam Zoll at Morningstar reports on some common myths about 529 plans.

  • Myth 1: You have to contribute to a 529 in your home state.
  • Myth 2: You have to send your kid to a school in the state where his 529 plan is offered.
  • Myth 3: You can only get a tax deduction if you contribute to your state’s plan.
  • Myth 4: If you save in a 529 account for your child, it will hurt his financial aid prospects.
  • Myth 5: If your child doesn’t go to college, you’ll lose the money.
  • Myth 6: All 529 plans are the same.

You can read the complete details on any of these points by clicking the Morningstar link above.  Myth 5 can sometimes be avoided if you spend 529 funds to pay for the education of other family members.  Financial planning can be complicated, and planning for college bills is no exception.  When you add in the complexities of how financial aid is awarded, it can make for a very stressful and confusing situation.  It makes sense to become more educated about saving and paying for college.

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