Part 21 (1/2)

Saving for College

The e expenses is to realize it's not your top financial priority You're not a bad parent if you don't save 100 percent of the e Eliency fund, and regularly contributing 10 percent or more of your income to a retires first? Because you can get grants and low-interest loans for college No bank is going to lend youto appreciate having their college paid for if at age 75 you have to h for retiree, 1-2-3

1 Open a 529 college savings account online

2 Select an age-based plan

3 Contribute autoe costs, youill You can find costs and use calculators at the College Board Web site, found at collegeboardcoeco

For a newborn, you'd have to save about 180,000 to pay the cost of sending the child to a state university A private university? About 367,000 But those are the scare-you-to-death numbers that stray from reality

Relatively few students pay the full ”sticker price” for going to college Besides growing college savings over the years, you'll potentially have scholarshi+ps, loans, grants, and other fore yearly cost of a four-year public school in 200809 was just 6,585, according to the College Board Over four years, that's about 26,000, or about the cost of a modest new car

Another problem with those scary numbers? It's probably not even wise to save 100 percent of college costs What if your child doesn't end up going to college? What if through new governe decline? What if your savings grow faster than expected and you have too e is expensive and the sooner you can start saving, the better

The biggest problee is it can be complicated There seem to be a million and one details, sooing to siestion

Go to uesporg and open a 529 college savings plan, called the Utah Educational Savings Plan You don't have to be a resident of Utah to participate and your child does not have to go to school in Utah It's just a cookie jar to stash the e federal tax break when you withdraw the e-based plan No 8, called Diversified-B Contribute at least 50 per ular contributions when you can You can always transfer to a different plan later if you have a good reason It's et started than to pick the absolute best college savings plan In fact, there are good reasons for choosing other plans But choice No 8 in the Utah college savings plan is ”good enough” for alet it started

Here are the details on college savings

1 Open a 529 College Savings Account Online

You have e, but only one is a clear choice for almost everybody Just like 401(k) and 403(b) retires vehicle has a weird name, derived from the federal tax code that allows it It's called a Section 529 college savings account

The basic deal with a Section 529 account is you put money into investments within the account over the years, in lump sums, monthly installments, or both The money is usually invested in a mix of investments, such as stocks, row so you can pay more and borrow less when it's tie Of course, you could do that in regularwithin a 529 account coe costs at any accredited school Growth on that ain-is free of federal tax That's a huge advantage, likely to a for your kid's tuition, rather than funding Uncle Sae of 529 plans is you can contribute a lot of money It varies by state, but caps are typically around 300,000 And anybody can contribute, including grandparents and other relatives The e tuition, but also for roo a coe-or, heaven forbid, dies-you can transfer the account to another relative or use it yourself The definition of a fa to such familial relationshi+ps as step-children, nieces, nephews, and first cousins If you don't use the e, you'll have to pay a 10 percent penalty on withdrawals plus incoets a scholarshi+p, you can withdrawthe 10 percent penalty But you will have to pay inco an Account

How do you start a 529 account? That's both easy and hard But mostly, it's worth it, to keep Uncle Sae

It's easy because once you choose a 529 plan, you just fill out forms and mail a check (or fund it by electronic transfer from a bank account) Some plans let you do all that online That's it You've successfully opened a 529 college savings plan Make sure to open separate accounts for each child, but register accounts in parents' names That's so you, as a parent, control the invest fora 529 account is so easy, there's no reason to go through a stockbroker, insurance salesperson, or financial planner More i an account by yourself is free A financial professional is likely to put you in a plan that includes corowth on your college-savings money That means you'll probably have a se bills Professionals don't have access to better plans than you do as an individual

Choosing a Plan

Where people get bogged down is trying to choose a all the different plans Section 529 plans are operated through state governments So,part: You can pick froo to school in any state That means you're not locked into your own state's plan

That sounds like good news But there are so many plans with so many different features, costs, and investment choices, it's alent way

But take heart You can transfer your 529 plan once a year So, you're not locked into your first choice You can always change it later

That's why, to s sis Plan, found at uesporg The Utah plan is on virtually every respected list of top-tier 529 plans It has low fees and great investment choices

Is the Utah plan the absolute best choice for everybody? Not necessarily But it's a darned good choice, and it's ”good enough” to get you started so you can get on with your life Opening and regularly contributing to a decent college savings plan is far more important than which one you choose