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- today I'm gonna talk about the 529 college savings plan explained so I'm
- gonna go through some of the major points of the 529 plan things that I
- think are important to give you a good understanding of how you can use the 529
- plan for your son or daughter, grandchild or whichever beneficiary you
- choose for their 529 college savings plan I'm also gonna talk about
- one particular point that I don't think it's talked about enough and I think
- it's a huge risk of the 529 plans and I'm also gonna make another
- video specifically talking about this issue if this is your first time
- watching these videos or you haven't subscribed yet be sure to click on the
- bell at the bottom and subscribe today
- my name is Travis Sickle CERTIFIED FINANCIAL PLANNER with Sickle Hunter Financial Advisors
- The 529 college savings plan let's get right into how it works so these are dollars that get
- invested in after-tax dollars into an investment account grow tax-deferred and
- if they're used for college education or K through 12 they come out tax-free when
- you're thinking of the529 plans think of them just like a Roth IRA
- these go in after tax dollars the same way that a Roth IRA does they're gonna
- grow tax-deferred and then they're gonna come out tax-free as long as they're
- used for a qualified expense so the Roth IRA is for retirement the five to nine
- plan is going to be for college education expenses and again when I say
- college education expenses I'm also talking about K through 12 so any of
- those school related expenses you can use a 529 plan for
- The 529 plans or the 529 plans are state sponsored plans they're set up state by
- state but that doesn't mean you're limited only to your state's 529 plan
- you can actually look at other states to see if they have a better 529 plan
- when you're looking at which is a better 529 plan you're looking
- at the actual investments so the investment choices inside these 529
- plans are typically mutual fund type of investments and you'll be able
- to choose some of the options with inside those
- plans so you can kind of construct your own portfolio
- there are also portfolios designed with a specific target date in mind when
- you're comparing the 529 plans it's going to come down to the
- investment choices that you have inside that plan which traditionally are mutual
- fund style investments now some of them you're gonna be able to construct your
- own portfolio so if you really want to get into the weeds of it you can build
- your own portfolio or you can choose a target date style fund which will either
- show you the age of your child currently or the target on which the money is
- going to be used so those are target date funds so the idea behind them is
- they're gonna be a mix of equities or stocks and bonds so the closer we get to
- that target date it's gonna have more bonds than equities inside of that plan
- which will gear it towards their risk tolerance for that particular goal
- another point of the 529 plan is the ability to transfer to another
- beneficiary so if you have multiple kids and your oldest is in school and they
- don't use all the money you can actually trickle that down to another beneficiary
- or you can actually give it to another family member another niece or another
- nephew so there's a lot of flexibility in
- transferring the 529 plan and if if you have multiple kids in school
- at the same time if you have twins or triplets then you can actually take that
- money in certain plans and transfer it in the same year so you don't
- necessarily need to have multiple 529 plans or multiple accounts when
- you're planning you can have those assets in a 529 plan and then
- transfer it to another 529 plan now you can't have two beneficiaries on
- the same 529 plan so you will eventually, have to open up a separate
- 529 plan count and those those rules are based on the individual
- plan so be sure to check with whatever plan that you're going with on their
- transfer rules I know for the state of Florida you can actually take the assets
- from one 529 plan and transfer it into another 529 plan with
- the state of Florida as many times as you want throughout the course of the
- year the 529 save plan limits the contribution limits the
- amount that you could put into the plan according to the IRS or only the amount
- that you can fund for a college education so there's no actual number on
- it but if you don't use those dollars for
- college education not only are you gonna have income taxes but then you're also
- gonna have a ten percent penalty so you don't want to over fund the five to nine
- savings plans and you also want to consider the gift tax consequences
- currently in 2018 that's 15,000 per beneficiary so it's another
- consideration you might want to spread out your contributions over a set amount
- of years when you're planning for college education one of the biggest
- risks I see of the 529 savings plans are the bond funds that are inside
- of these plans and a lot of these target-date funds will shift more into
- bonds or bond funds specifically in these plans to make you believe that
- they're being more conservative in their investments and that money will be there
- but bond funds can lose money and their positions such as bonds which adds
- another layer of risk when you're looking at a bond fund versus an
- individual bond it's such a big deal I'm gonna do another video on it to really
- explain and give you some data to back it up
- on what you should really look at when you're looking at these five to nine
- plans and is it really worth it to invest in a 529 savings plan so
- if I haven't already I'll post a link up at the top you can click on it we can
- get a little bit more in-depth on the five to nine savings plan an investment
- portion to it and the risks that are not talked about enough in a 529
- savings plan again as soon as the video is posted I'll post the link at the top
- if it's not there already right here just click on it I'll go in a little bit
- more into depth if you've enjoyed this video be sure to subscribe and leave
- your comments down at the bottom
-
today I'm gonna talk about the 529 college savings plan explained so I'm
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