Tips to Maximize Education Savings

529 plans are a popular way to save for college. However, how do you decide which plan to invest in?   Given the goal of choosing a plan that maximizes funds available to pay for college, reduces the need for student loans and provides flexibility in college choice, here are some criteria to consider:   𝐏𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞: What is the annual return on investment? 𝐂𝐨𝐬𝐭: What are the fees, including sales charges and the asset-based expense ratio? 𝐃𝐢𝐫𝐞𝐜𝐭-𝐒𝐨𝐥𝐝 𝐯𝐬. 𝐀𝐝𝐯𝐢𝐬𝐨𝐫-𝐒𝐨𝐥𝐝 529 𝐩𝐥𝐚𝐧𝐬: Direct-sold 529 plans tend to charge lower fees than advisor-sold 529 plans. Direct-sold 529 plans do not charge sales commissions, while some advisor-sold 529 plans do. 𝐓𝐚𝐱 𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬: More than 2/3 of states provide state residents with a state income tax deduction or tax credit based on contributions to the state’s 529 plan. Nine states provide the state income tax break for contributions to any state’s 529 plan (Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio and Pennsylvania) and four states don’t offer a state income tax deduction or tax credit (California, Hawaii, Kentucky and North Carolina). 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐎𝐩𝐭𝐢𝐨𝐧𝐬: 529 plans offer a limited selection of investment options. Some offer static and multi-fund portfolios based on passive index funds, while others offer portfolios based on actively-managed funds. Some 529 plans offer FDIC-insured investment options, while others offer exchange-traded funds (ETFs). You might also find some 529 plans with more than one age-based investment option, differentiated by risk tolerance. 𝐌𝐢𝐧𝐢𝐦𝐮𝐦 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬: The minimum contribution in some states can be as high as $250 to $3,000 (e.g., Alaska, Arizona, Indiana, Montana, Nevada, New Jersey, Ohio, South Dakota, and West Virginia). In other states, the minimum contribution is as low as $15 or $25 per month in an automatic investment plan.   Did you know that savingforcollege(dot)com provides a 529 plan comparison tool that has detailed data on all the state 529 plans? It’s a great resource! #taxes #financialliteracy #lawyers #collegeplanning

I know most of my followers are over 17, so I'm not trying to rub salt in the wound here, but maybe you know a high schooler who could benefit from seeing this?!‎‎ ‎‎ The difference between Nick and Nicole seems barely relevant. When they meet for a drink at 22 and exchange war stories about student loans, they both probably shrug their shoulders and think, "damn, that sounds like a lot of money". But look at the massive ripple effect it has down the line. Mitigating just $20K of student loans generates almost $400K more in investments at retirement, with the EXACT SAME payments and investments made. Here's some ideas on how to mitigate those loans:‎‎ ‎‎ • Go to a cheaper school. I've been in charge of hiring for a lot of my career, and I can vouch that outside of a very few name brand schools, hiring managers generally don't give a shit where you went to college. They care about your major. Your internships. Your work ethic. A valuable major from a cheap state school will get you WAY further than a useless degree from an expensive private school.‎‎ • Work. Research suggest that students who work get better grades. $20K over 4 years is $5K/year. That's $416/month. You could make that working ONE NIGHT PER WEEK as a server or bartender. Would you work one night per week for four years if it came with a $400K bonus down the road? I would. And I'm already rich.‎‎ • Hustle to find scholarships. ‎‎ • Find summer job that offers tuition reimbursement. ‎‎ • Become a resident advisor or teacher assistant position that offers discount tuition. ‎‎ • Do your pre reqs at a community college that will transfer to your school of choice.‎‎ • Google for more ideas that I haven't thought of here.‎‎ ‎‎ And by the way, I think it totally sucks that we saddle our teenagers with this massive burden. It's a messed up system. But that's the way it works for now, so work the system before it works you.‎‎ As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎‎ ‎‎ -Jeremy‎‎

Annie’s Answers Part 3: Save and Benefit College Saver 529 Accounts As everyone knows at this point, college is incredibly expensive. Loans can be a very painful way to start a post-graduation life, but are many times necessary for the field you want to go into. If you have the ability or desire to start saving for your kids education, or even your own continued education, a state sponsored 529 account may be a good option to consider. Things you should know: 1. This is an account you save Post-Tax income towards college/post-K12 education, that can be invested and grow tax-deferred over time. And as long as you use the funds from the account for qualified education expenses, any gains/earnings can be withdrawn **Tax Free.** 2. You can use 529s for college tuition, universities, professional school, graduate school, room, board, books, fees… and some (not all) states allow you to use it towards private K-12 schools. 3. MANY (but not all) states allow contributions to be eligible for state income tax deductions. 4. If you are a continuing education adult, currently paying for your own school or considering it… if your state offers a state-level tax deduction, you can contribute to your own account, and get a tax deduction for that contribution. 5. If one child doesn’t use the money in their account for any reason a sibling or another family member can have the funds rolled over to be used by them instead. 6. If your child doesn’t use it at all, you will pay income taxes and a 10% penalty, but ONLY on the gains/earned portion, not on your contribution. (Your contributions do not get taxed again since this was post tax funds). I was lucky enough to get a full ride to college, but it didn’t cover things like books and fees and food plan. I was able to use what my parents saved in a 529 for that and then was able to roll over some for my brother to use. I also went back for my 2nd masters and was in a state that gave a state tax income tax deduction. So I contributed to my own account, withdrew from that account, paid for my tuition and got a state tax deduction for using it, even though it was only in the account for a very short period of time. This is not for everyone, and there are a lot of different ways to save or pay for college. But… it’s a good program to keep in mind as an option. #AnniesAnswers #SamStats