529 Plans: The Need-to-Know Details, Ep #20

<p>In February of 2020, the student loan crisis hit a record $1.6 trillion. It’s not uncommon to talk to college graduates who have thousands of dollars in debt. Many pre-retirees would like to help pay for or fund their grandchildren’s education. It’s personally on the top of my list. I believe college education is a gift that can never be taken away. </p> <p>How do you help save money for your children’s or grandchildren’s college education? What’s the best way? One of the best ways to save money for college is with a 529 plan. In this episode of Retirement Made Easy, I answer some commonly asked questions about 529 plans.</p> <p> <<<<<<<<<<<<<<<PLAYER CODE GOES HERE>>>>>>>>>>>>>>>></p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[2:55] What if my child doesn’t go to college?</li> <li>[7:51] What are the benefits of a 529 plan?</li> <li>[12:20] How the SECURE Act changed the game</li> <li>[14:35] How you could invest the money in the 529</li> <li>[16:49] How much is enough to save?</li> </ul> <h2>What if your child or grandchild doesn’t go to college? </h2> <p>The most common objection I hear to funding a 529 College Savings plan? What if they choose not to go to college? Is that money lost? No—here are your options:</p> <ul> <li>Option #1: <strong>Change the beneficiary to another child</strong>. If your son goes into the military and doesn’t need the 529 plan, you can change the beneficiary to his sibling. </li> <li>Option #2: <strong>Change the beneficiary to a blood relative.</strong> If there’s not a sibling that could use the funds, you can look at a blood relative (i.e. a cousin).</li> <li>Option #3: <strong>Withdraw the funds</strong>. If there are no other blood relatives that could use the funds, you can withdraw the funds. You’ll likely be hit with a 10% penalty and you will be taxed on the capital gains. <em>But the money is not lost</em>.</li> </ul> <p>With that being said, this rarely happens in my experience. Plus, if the beneficiary wants to take a class or g