As a financial planner, we help our clients prepare financially for their kids and grandkids college using various saving programs, the 529 savings plan being one of our favorites. For us it was no different, we estimated the amount of annual expenses for tuition, room & board, books etc. and then starting investing in accounts for each kid to have enough to provide the needed funds to get them through at least four years and perhaps beyond. We can make tax free withdrawals from the tax deferred investment account for all qualified college expenses which are quite liberal in scope.
What we didn’t expect was the amount of scholarships Marcus received from his superb academics, community involvement and the International Bache laurate diploma he received after busting his butt in High School for all the busy work and intense testing that entailed. Because of the IB program and top grades, he was able to receive a full tuition ride from the Bright Futures program for the state of Florida. He also just passed his Boy Scout Eagle board review so that will be a nice addition for future resumes as well. It is interesting that because he is now 18, the school sent him a refund of overpayment to him vs. us his parents who funded the account! That was promptly redirected to another account that we’ve built up for other miscellaneous future needs, perhaps a down payment on a home. If we don’t end up using all the funds in his 529 account,we can transfer the remaining balance to our daughter’s account with no tax consequences. She has her sights on UGA in three years which would slam us for out of state tuition, so we’d better be sharpening our pencil to set aside the dough for that plan!
Investors should consider the investment objectives, risks, expenses, and whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 college savings plan before investing. There is a risk that these plans may lose money or not perform well enough to cover college costs as anticipated