I'm planning to open a 529 plan for my 9 year old. I'm thinking to use Fidelity as my other company accounts are with it. CA doesn't provide any tax benefits so wondering what state plan to choose and is there a better option than Fidelity? I'm thinking to put 15k. TC: 180k
Is it actually worth it to have 529? I have heard this money is considered gone, kids will not qualify for any scholarships or anything until they deplete these funds.
I heard the same and that was one of the other reason why I lost tons of time. If your kid deserves he will get scholarships, you will still have tons left to pay for college, this is where 529 helps. You can ask this question to 529 plan administrator such as Fidelity, a proper, responsible answer from them is much better than from any of us.
Assuming this is a reply to my comment. I imagine Fidelity is motivated to bring you in so they can just say whatever. They also do not know. Better ask people who give out scholarships but I do not know anyone.
This thinking is not correct. You can ask the same question to different 529 plan administrators, and then call up financial aid officers in various universities in of your interests. This is directly coming from the source. Also, there are paid counselors and school counselors, you can reach out them and ask the same question. Where I am going with this is that you will hear consistent answer. I have friends who have done 529, their kids are in IVY leagues universities with scholarships, none of them mentioned that 529 was not helpful.
1. You can buy any state plan, if you live in CA, you cannot get state tax benefits on contributions. 2. 529 is supposed to be for education so you will not see an over aggressive investment option in any state plan. They don’t want you to lose money when the child needs it. 3. Investments should start early in child’s life so the money grows. Contribute as much as you can 4. There is no impact for scholarships. Scholarship is rare. Hard to get. If you are banking on a 1 % chance it is not a good strategy
Just put the money in. We’re planning on doing a one time lump sum of $50k after the kid if born. Even if it only grows an average of 5% a year, it should have over $120k when they are 18. We can easily afford to pay $100k a year for college + expenses for the 4 years they would be in college, so we weren’t even sure if we needed it
Check these if you want to do it by yourself https://www.whitecoatinvestor.com/best-529-plans-reviews-ratings-and-rankings/ https://www.whitecoatinvestor.com/tax-break-for-the-rich-the-529-account-back-to-basics-series/ https://thefinancebuff.com/529-plan-deduct-and-run.html#:~:text=529%20plans%20are%20for%20college,some%20states%20have%20multiple%20plans. From what I saw Michigan and Utah was considered as the best plans for 529 https://www.morningstar.com/personal-finance/morningstar-529-ratings-top-plans-what-they-offer PS: I got these links from a different source
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I was in the same boat at some point of time, thinking to find out the best state plan to open, and forgot to consider opportunity cost that we miss while “trying to find”, in the long term the difference is not much. Just start with the state you are in, else you would have the same conversation 3 years later, still have not contributed single dollar.