As I mentioned in a previous post, I finally pulled the trigger and set up a 529 college savings plan for our daughter. How did I choose the plan? Well, it all started with a visit to:
http://www.savingforcollege.com
This site is THE authoritative source for 529 plan information. I began by reading up on the basics here. Once I felt like I had a decent understanding of the rules and guidelines, I checked out my state sponsored plan. Frankly, I don’t like Washington state’s “GET” program. GET stands for Guaranteed Education Tuition. Basically, you buy credits at a price set today and then can use those credits to pay for college when your child enrolls. I think one of the turn offs for me was that the price just goes up every year. Credits get more and more expensive. (understandably) I think I’d rather invest in some index style mutual funds and take my chances there.
So, I decided I wanted to go down a more traditional path of investing for college. Since my state doesn’t have any income taxes, I was pretty free to choose from any of the other state’s programs. If I did have an income tax in my state, I would have wanted to be sure that by choosing another state’s program, I wasn’t missing out on any state level tax benefits. That wasn’t an issue for me so I was free to wander through the other state’s plans.
After much analysis and comparisons here, I decided to go with the Ohio state plan. I liked it for it’s online capabilities, it’s direct sold option (no broker), it’s choice of Vanguard funds (and index funds that I was interested in) and saw that it was rated near the top.
Signing up was a BREEZE. I simply filled out an online set of forms and then set up the automatic transfer from my checking account. I now have an automatic investment coming out on the 15th of the month each and every month. I don’t even have to think about it.
Another great part of this plan is that I’ve started to tell my family all about it. I received a packet in the mail that has deposit slips that I can hand out to family members. A couple family members have shown some pretty strong interest in putting a little away for our daughter. This will be just the ticket for them to do it!
Congratulations. My wife and I set up a California 529 plan for my son when he was about 6-months old. He’s turning four in August and his plan is already well on its way to helping him out one day. Since he’s so young and our house is so small, we’ve asked close friends and family to limit toys as holiday/birthday gifts for him and to consider contributing to the 529 instead. It’s a wonderful way to save for the future.
That’s a great idea Mike. We have also asked our family to consider splitting her gifts with half going towards a toy or clothes and the other half going in the 529 plan!