Description: The following article mainly focuses on the key point of tiaa login. Kid Spaces got together concerned parents and Regina Lewis, an author and expert on personal finance trends, to talk about college saving solutions with the spotlight on the 529 College Savings Plan.
This is the show all about you and your space, your home, lifestyle and how they affect your kids, we are kids spaces, earning a college degree is still an important part of the American dream for millions of families, but covering the cost can be challenging.
Increasingly it’s a family affair, kids spaces got together with Regina Lewis, author and an expert on personal finance trends, to talk about college saving options, thanks for taking the time to learn more about paying for college.
We know and appreciate it because you care about a young person, a child, a grandchild or a neighbor, maybe you’re even the student with any value education, here’s what we’re also guessing, you don’t have an extra one hundred and twenty thousand dollars sitting around to fully fund a four-year degree, trust me, I get it.
But we’re going to cover a lot of ground today talking through real-life scenarios with real options you can apply to your own situation, actionable advice is the goal, let’s get started, Luke thanks for joining us today, you’ve got a question to start us off.
I hear about 529 all the time but what is it? It’s a great question, a 529 plan is a tax-advantaged education savings plan, operated by each state that allows for families to set aside funds for future college costs including tuition, a portion of room and board, books, even a computer.
Generally the state chooses an investment firm such as tiaa-cref tuition financing incorporated to manage the plan which is a similar concept to a 401k. Almost anyone can open a 529 college savings account, some states enhance the tax advantage allowing you to deduct contributions up to a certain level on your state income taxes.
They do this to incent parents to save for college, it can be a meaningful deduction, it’s a good rule of thumb to look at your home state plan first, we don’t have a lot of extra money every month but education is very important to us, so is it worth it to have a 529 plan?
It is an awesome question, that’s exactly the reason why you want to have a 529 plan, it’s the reason why it makes sense, because you’re putting a saving system in place, college costs don’t sneak up on you or your child, imagine that you can start a 529 plan with as little as 25 dollars in many cases.
But hypothetically let’s say you go for a one-time $100 contribution to start off, you put that in a 529 plan at an annual interest rate of five percent, you could add twenty-five dollars a month to that one hundred dollars, you end up with nearly seven thousand dollars after 15 years.
Now we’re talking, as you may submit a car payment or a cell phone bill, set up a way to automatically contribute to a 529 plan on a regular basis, if you do that, you’ll be in good shape.
We have a big family and how can extended family members contribute such as my brother or my parents? What can they do to get involved? It turns out that they can do a lot which is great, but the key is to make it easy for others to contribute.
Certainly a child can have multiple 529 accounts in their name, having said that since it’s easy for families to contribute to an account set up by a parent, it’s common for grandparents, godparents and lots of well-intentioned people to add funds to the account which can be done electronically or by now. It’s a great gift idea, perhaps it becomes the birthday gift in your family.
How does a 529 plan affect financial aid? Are you less likely to get a scholarship with a 529 because they figured you’re already set? Compared to certain other savings vehicles, a college savings plan has a relatively minimal impact on a student’s ability to receive merit based financial aid including academic or athletic scholarships as well as student loans and grants.
It varies by college, so be sure to check with your schools of interest, how does it work? Should we open our own 529 or should we contribute to the one that our son has opened for our grandchild? You should certainly check with your financial advisor about your own particular situation.
But here’s what I can tell you, federal student aid factors in an expected family contribution or EFC, those expectations go up significantly more if there’s a withdrawal from a grandparent owned 529, mathematically you may be better off contributing to a parent owned account or transferring ownership prior to withdrawals.
A third option is to defer withdrawals until aid for the final academic year has already been awarded, at that point any financial aid has already been set, in other words you would help pay for the last year, you’re the closer, what happens if my child decides that he doesn’t want to go to school?
It happens, the good news is that the 529 can be transferred to another eligible family members, if you have multiple children, the fund simply move usually to a younger sibling, 529 plans work for vocational and technical schools, culinary schools and trade schools, so you’ve got a lot of options.
There are tax ramifications, if money is taken from a 529 account and not used for education, non-qualified withdrawals may be subject to federal and state income taxes and an additional federal ten percent tax, some states also impose their own penalty for non-qualified withdrawals but it’s not a huge penalty.
Is there a website that we can go to to learn more? In fact there’s a very useful website, go to tiaa-cref, that’s CREF org slash 529 plans, there you can learn more about 529 plans or even open a 529 in one of the eleven state plans that tiaa-cref tuition financing incorporated manages.
Once you’ve read the disclosure booklet and decided on your investment options, it doesn’t take long to start a 529, it is about 15 minutes online or five to seven business days if you’re mailing in a paper application, thank you, I’m so glad.
Thanks everyone for being part of this important discussion, I hope that it was helpful to parents and grandparents across the country, there are methods to finance your children’s college education, it all starts with family, consider giving the gift of education to your child, grandchild or loved one by opening a 529 plan account as soon as possible.
Keep contributing, to see this portion of the show again, go to the designing spaces, TV kids spaces section and click on the tiaa-cref video, you’ll find a link to the tiaa-cref website, for more information that you’ve seen on today’s show or to find out how to be part of the show, log on to designing spaces.tv, you can visit these websites to learn more about the participants on this edition of designing spaces.