We started you in with the basics of 529 Plans, now let’s discuss the types pf plans.
Savings Plans: These plans are similar to 401K or IRA “by investing your contributions in mutual funds or similar investments.” There are many options, but the amount in the account will most likely fluctuate based on the performance of the selected option.
Prepaid Plans: These plans allow contributors to pre-pay all or part of the costs of “an in-state college education,” but can also be “converted for use at private and out-of-state colleges.” There is also a separate prepaid plan for private institutions.
Here are some examples of the 529 plan in different states:
Example #1: Lonestar 529 Plan based in Texas
This plan initially started in 2002, but was changed and assumed by Oppenheimer Funds in 2007. This fund accepts contributions until the beneficiary’s (student’s) balance equals $370,000. A contributor must put in a minimum of $25, or $15 if he or she uses an automatic plan.
Example #2: ScholarShare College Savings Plan based in California
This plan began in 1999. Like the Lonestar Plan, it requires a minimum contribution of $25 or $15 on automatic plans. However, the amount one beneficiary can receive is slightly different: $350,000.
Example #3: New York’s 529 College Savings Program based in New York State
This plan began in 1998, but significantly changed in 2003. Again, the minimum contribution is $25 or $15 if the contributor uses payroll deduction. The fund accepts contributions until the beneficiary receives $375,000.
Next we’ll give you insight from from a student that used a 529 Plan for college and activities in your area celebrating 529 Day.
— Written by Rachel Montpelier
