Disadvantages of 529 Plans


Introduced in the mid-1990s, 529 Plans remain the flavor of the day.  Touted by Wall Street, financial advisors, and the main-stream media, families that try to save typically utilize a 529 Plan.

While the positives of a 529 Plan are the ability to invest in “high-return” assets, to avoid taxes on gains, and to use money tax-free for qualified education expenses, there are major downsides…

Any vehicle that has the greatest odds of having the money you need when you need it, also has the greatest odds of having less than what you need when you need it.  Where there are odds, there are no guarantees.

529 Plans can differ in the investments offered, the costs of those investments, the amount that can be contributed, the way the money can be used, and plan administration fees.  529 Plans, creatures of legislation, are ripe with restrictions. 

These plans also reduce the financial aid for which a family may qualify.  The greater the amount held in a 529 Plan (and that includes 529 plans for all kids in the family), the less aid available in the form of grants, scholarships, and loans.

Accordingly, it’s important to find the plan that fits your needs.  But, should it be a 529 Plan?

What’s the alternative?

We can share with you strategies that will allow you to save your money, that will not impact eligibility for financial aid, and that will provide greater access to and control over your money.

Whatever choice you make when saving for college, be sure to start today.  Be sure to give your money time to compound. Schedule your meeting with us and discover the right savings vehicle for you and your family. 

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