529 plans for college: shop and save fees

The result might have been different, however, if the error had occurred during a downturn, Morningstar analyst Madeline Hume said. She advised you to familiarize yourself with your plan’s performance, so that you can assess whether the returns seem unusual, and to be careful when your plan notifies you of changes. “It is important to keep abreast of communications going out,” she said.

The company rates 529 plans based on factors like fees, investment options, and plan oversight, and most are rated gold, silver, or bronze, indicating that they provide a net benefit to investors. However, eight plans received “negative” ratings, mainly due to excessive fees.

Here are some questions and answers on 529 savings plans:

What college expenses can 529 funds be used for?

Savings on a 529 can be used to pay for tuition, including tuition, room and board, mandatory fees, books, supplies, and required equipment.

Can I use 529 funds to pay off student loans?

Yes. Under a law passed in 2019, up to $ 10,000 from a 529 account can be used to pay off a recipient’s student loans. Another $ 10,000 each can be used to pay off student loans borrowed by the recipient’s siblings.

Can grandparents save in a 529 account for a grandchild?

Yes – and an upcoming change to a large financial aid form, the Free Federal Student Aid App, or FAFSA, should help make that more appealing. Currently, contributions from 529 plans owned by grandparents are reported to the FAFSA as non-taxable student cash support, which may reduce financial aid eligibility, the financial aid expert said. Mark Kantrowitz. An updated FAFSA, however, will eliminate the question on cash support, he said, so that 529 distributions owned by grandparents will no longer be included on the form. The change is expected to take place with the FAFSA available at the end of 2022, for the 2023-24 academic year.

The change, however, does not affect a different student aid form, the CSS profile, which is required by many high-cost private colleges, Kantrowitz said.

Source link

About Madeline Dennis

Check Also

Counting What Matters – Finding Purpose in Financial Planning

“Not everything that can be counted counts, and not everything that counts cannot be counted.” …