529 College NON-Savings Plans | Financial Planning Chapel Hill l Old Peak Financial Advisors

529 College NON-Savings Plans

August 26, 2016

Old Peak Finance - 529 College Non-Savings Plan

529 College NON-Savings Plans

August 26, 2016

If you have a 529 college savings plan through a Wall Street bank, move it.

And hurry.

529 plans sponsored by Wall Street banks charge an annual fee of about 1.5%. By contrast, a “retail” plan (one you set up directly, on-line), usually costs about 0.25%.

Over the 20 years someone puts money into a 529, the lower fee will probably mean your kids have 25% more money for college. College costs are high and escalating. You need every dollar.

As a reminder, 529 plans offer a tax break. That’s the reason to use them. If you put money into a 529 and later spend it on tuition, room & board, etc., there is no tax on the gain. Each state has its own plan, many of which offer additional tax breaks to residents. To learn more about 529 plans, check out this white paper on our website, written by summer intern Daniel Lee.

There is no reason to pay a premium for a 529 plan. Most of the plans offer the traditional “age-based” funds. They start with a high percentage in stocks and gradually move to a conservative mix as your child nears college. That’s when they should take less risk. These “age-based” funds do all the work. So why would you pay an advisor?

It's easy to "roll over" your existing high-fee 529 to a lower-fee 529. Email us if you need help.

529s are one of the dark corners of Wall Street. Sure, your advisor deserves to be paid. But not for a 529. Pay him when he adds value.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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