Are 529 Saving Plans All The Right Choice For Your College Plan

For a long time people have been going on the rant about how good 529 saving plans are, and what they can do for a person that is saving for college. It works wonders for a person that would love to put a kid through college later down the road. You open up one of these accounts, and it does the rest. You do not have to worry about taxes or the beneficiary taking the money (that is because you have complete control over the money). So when you think about it, these types of 529 plans are flawless, are they not? Well when you step back and take a look at the big picture, these types of saving plans could be ripping you off. Not only that, they could be hurting the government. Something that most people do not think about is the fact that states have their own 529 plans, but the real question there is, why?

Whenever you are thinking about 529 plans, what do you think about? Do you think about a nice, easy way to put a kid through college. Sure, that is what most of us think about. However, do you know what the state think about 529 plans? Money, they simply think of money. This is why each state has their own 529 plans. There are some pretty big state fees that go along with your 529 plans. The maintenance fees that most of them charge can turn out to be a nice stream of cash every year for them. Of course, states are not the only ones getting the better end of that deal. Any financial companies that deal with these kinds of plans are getting the money from the fees as well. In fact, it is said that the fees that go along with the 529 plans are higher than almost any other college saving plan in the world. Most of the fees will eat up a big part of the money you are trying to save. Sure, you will make some money, but not as much as you would think with the amount of money you are putting into it.

In the end, the federal government will have to spend billions and billions of dollars in tax revenue to make up for the money of the 529's. To begin with, the government use to subsidize the 529's to help encourage people to go on and take their education to the next level. Now it seems more like a safety net for the states and companies that like to charge high fees with the 529 plans. So is there anything that we can do to stop it? Well for now I do not think that anything is going to be done. To actually fix this problem you would have to take away most of the benefits of the 529 saving plans. It could even help if Congress would raise the limitation on contributions for government owned 529 plans, like the Coverdell Education Saving Accounts. This may help more people to start using the Coverdell Accounts instead of the state owned ones. I think that it should be allowed to withdrawal (free) from your 401(K) plans, if it's for educational expenses. However, either way you look at it, this is going to cost the federal government a lot of money.

There are many different ways to save for college, and help kids through college. 529 saving plans are just one of the many ways. I would like to point out that 529 plans do work, they are not all bad. However, you have to know that they are not quite as good as everyone makes them out to be. You also needed to know why a lot of states push you to open up these 529 plans. Not only is it helping you, it is helping them. Bringing in a large sum of money like they do on just fees is an easy yet effective way to bring in money for the state. These fees will get you if you are not careful. Before you sign up with one of these plans be sure to ask about the fees that go along with it. No matter what plan you go with, there's going to be a lot of fees, however, not all the fees have to be so high. By shopping around you will be able to find a good deal on all your plans.
 

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