Opening a 529 savings plan is quite easy.
For example, in Pennsylvania, just google PA 529 and click “Enroll” to open an account.
The you should fill in the form with your address, birthday, SSN, phone number, email, your beneficiary’s name, birthday, and SSN.
There are 3 ways to contribute to the plan: via Payroll, bank account or cheques, Ugift. You can choose either way.
This is the first step of having a 529 savings plan. After that, you should learn to manage your account properly. The most important thing would be choosing funds.
How to choose funds?
Age based portfolios
State, for example PA, will provide multiple funds, which include equity, fixed income and stable value. Higher revenue means higher risk. Remember to choose the one that fits your condition most. PA also has regulation on the age of your child to ensure your investment. If the child is 0-3 years old, you can choose 100% equity funds; 4-6 years old, 83% equity and 17% fixed income funds; 10-11 years old, 60% equity, 32% fixed income funds and 8% stable value funds.
PA also provides other investment plans, such as static portfolios and individual portfolios. Related information can be found online. You can go to the website of your own state and check all the policies, then make your decision.
Tax-advantaged policies may be the biggest appeal of opening a 529 account. A saving for kids’ education can help them release the burden.
However, there are some disadvantages. If you withdraw the money for other purposes rather than education, there will be a 10% penalty. The money in the 529 account is considered to be part of your family assets, which may influence the kid’s application for financial aid in the future. As an investment account, you have to take the risks of losing money.
It is your choice on how to manage the account. If you run the account well, your family can all enjoy the benefits of a 529 plan.