529 college savings plan Benefits
Investment Control :
- The state doesn't control your money. Most states are using well-known, successful investment companies such as Tiaa-CREF, Vanguard and Fidelity. The number and types of investment options vary by state, and once you select your option you can't change it. You can, however, roll your money over into another state's plan if you're not happy with your chosen investment option. There is no penalty to roll the money over into another state's plan, and you can do it once every 12 months. Most states have no residence requirement for their 529 plans.
- Many plans are also offering investment choices that are age-based. This means that if you're starting early, perhaps when your child is age one to three, the investments can begin aggressively in stocks then gradually shift to bonds and money market accounts as your child gets closer to college age. Some state plans offer several levels of options for aggressive, moderate and conservative investments.
- If you can't reach the risk level you want in one plan, you can always open a second 529 account in the same or another state. You can have as many accounts as you want and can also contribute to both a 529 plan and an ESA. That way, you can diversify your investments in the event that the plan doesn't offer the investment mix you would like.
- Unlike custodial accounts or Education Savings Accounts (ESAs, formerly Education IRAs), the beneficiary does not gain control of the money at a specific age (usually 18 or 21 for those types of accounts). The account owner always has control of the money. This helps lessen that parental anxiety that Junior will take the money and tour Europe or buy a Porsche instead of going to college.
- There are no restrictions on who can open an account for whom. You can open an account for your child, a friend's child, a relative, the paper boy, or even yourself.
- Anyone can contribute to the account. Now all (or at least some) of that birthday money from Grandma and Grandpa that's usually blown on candy and soon-forgotten toys can be funneled into the college savings account!
Additional 529 College Savings Plan Information