Very nicely explained. A tabular representation of the relative performance of the mentioned plans would have been more helpful to understand the relative merits and de-merits and decide on one.
I’d use the college inflation rate as opposed to the general 3% inflation rate. From 2001-2021, the average tuition inflation rate was 4.8% per year at public two-year colleges and 3% at private two-year colleges.
Hi Tim! Great information! As a California resident, if I enroll in the Ohio 529 plan, are there any considerations we should consider? Is there one you would recommend for a California resident? thank you in advance!
An interesting point to note, the IRS does not currently require states to account for assets held in other state's 529 plan. Meaning you could contribute millions of dollars into 529 across the country.
Awesome video and thank you! I initated a 529 plan with fidelity , however they only offer me specfic states which none are even close to Gold or silver rated like with morning star. I live in Fl btw but have a military home of record of Tx, if it even matters. Any advice? Should open account else where to get more options?
Hey there, good question. Where you live or your child plans on going to school does not matter. You can invest in any state. I would look pick the State's plan you want to invest in, then choose a broker that provides that State;s plan.
Hi Tim, thanks for posting the video. Quick qu. If our kids decided to study overseas, what sources might we look for to find out which international colleagues can make use of the 529 plan?
Hi Tim, I live in New jersey, so there is no point in me investing in a 529 plan which is from New Jersey. Does that mean i should invest in another states 529 Plan for example the New York's 529 program. Will that allow me to save tax if i invest in another states 529 Plan since i am from New Jersey.
On average college tuition goes up between 6.5% - 8% every year. Meaning the cost of tuition will double approximately every 9 years. So you can look online at tuition cost for schools in your area and times that by 2 to 2.5 and you should have an estimate.
Hello, newbie here, so my grandmother has an investment stock that she wants to pass down to my two children (7yrs and 2yrs)was considering putting the lump sum in a kids ira but they are not employed, would you suggest 529 NY to be a better option? And why?
What can i do if i want to save in the Nethetlands for a good college. My daughter is 3.5 and i am saving with my dad together also my aunt. She gets 3 bucks from me every week in her pickybank. The cashback savings are around 300 - 500 euros each year. And she has an auto on my acount that gets her 15 euros each month. My aunt gives her 2 euros each week and my dad around 20 i think each month i dont know that. But the colleges and intutitions are around 7000 to 64000 euros. They go around 16- 18 years into college. We have a lot of levels of high school vmbo you can go to a college where you can do baker, truck driver, nurse, hairdresser or something with cars electrics plumping you get it. These are around 7000-10.000 and the higher Havo teacher and managment or journalistism costs 20000- 30000. VWO Gymnasium the highest in high school Levels Doctor proffessor on a college teacher, pilot. Costs 40.000 to 64.000 or sometimes 70.000. How much should i save each month when she goes to college in 13 or 15 years. You can go everywhere to college here. The only problem is you pay a rent room at least 400 500 euros.
I am not familiar with Netherlands tax beneficial accounts so I don't think I am of help here. I do know that Americans who have 529 plans can use their 529 savings at International schools but I don't know about Netherland citizens.
Based on the calculations I've done typically a minimum of $150 per kid per month if you start when they are a baby. If they are already toddlers you would want to put about $250 per month. If you want to pay in full for them to go to one of the more expensive private school you're looking at $400-$500 per month
Correct. Texas is a good example of utilizing other State's 529 plans because there is no state income tax in Texas, therefore there is no extra benefit to investing in Texas' 529 plan as opposed to Utah.
@@ChandanKumar-em8zg 2 accounts motivates you to contribute more and is very black and white when it comes time to use it on your kids. Instead of having to split the account and calculate what a "fair" split would be (accounting for future inflation & compound interest) it's easy to know exactly what's fair.
I’ve been considering Ohio‘s 529 plan only thing holding me back is if my kid doesn’t use it to go to college how much are the penalties to withdraw it? I was thinking either way if you only get taxed on the growth it’s still better than the money just sitting in a savings for now correct?
If you do not use the 529 for educational expenses you would pay a 10% penalty and taxes on the gains. One way to look at it like you're alluding to- As far as taxes, you would have paid that anyway if it were invested in a regular brokerage account and if the money is invested well (averaging 10% ROI/year) then the 10% penalty would really only discount the last year of gains you had in the 529.
Keep in mind, this plan can be used for different types of schools beyond colleges or universities such as culinary schools, vocational schools, and even dance schools.
Hello...I am not a US citizen(working in US on H1B visa)but a resident alien but my kid is US citizen...can I still open an account for my child?..suppose I moved out in 3 years back to my country..when my child come back for the college to US can he use that money that time?...if I died my beneficiary will become owner when he comes to age?can I contribute outside of US as well?
In order for yourself to open the account for your child you need to be a US resident or resident alien, have a social security # or Tax ID #, and have a US address. If any of those three things were to change you would no longer be able to have the 529. The beneficiary of the account would be whoever you put as the beneficiary, if it's your child then yes once he becomes of age. And no you would not be able to contribute money made outside of the US.
You personally only have to choose to invest in the NY plan as one investment. And what you're getting within the plan is a combination of investments (stocks, mutual funds, etc) but the allocations of what the plan is invested in is out of your hands. That is up to the people that run the plan.
You don’t pay tax going in to the plan because the money you contribute into the 529 has already been taxed (just like putting money into a Roth IRA). You don’t pay tax on withdrawals as long as it’s used for qualifying expenses. I live in Texas and use NY’s 529.
@@LuisMunoz-pi3nc no, not that I’m aware of, but I’m not a tax accountant. I believe you pay taxes on the money (eg not deduct it from your taxable income) just as if it were a Roth IRA contribution, but benefit is that when the dollars come out there is no associated tax on the gains if used for qualifying education expenses.
Hey Tim, had a quick stupid question. I opened a 529 account for my son using Fidelity but not sure which state I choose. I live in NJ but can't recall Fidelity asking me which state plan I wanted to use
First thing is I would make sure you actually are investing the money within the account and it is not just sitting in a 529 account univested (I've seen that before and it's devastating when the person finds out 15 years later the money was never invested it was just sitting in the account like a bank checking account, earning no compound interest). Second, when you log into your account, Fidelity should show you in the overview of your account what you are invested in. If the investment has the State's name in it that is easy but some don't and they are called weird things, just google it and see what State plan it is. Third, if you are still not sure you probably should call Fidelity and ask what plan your 529 is invested in.
You can use it for anything the scholarship does not cover: tuition, room and board, fees, books, laptop. Or you can change the beneficiary to any other family member (another child, you etc..). Or if you choose to withdraw the money you will pay taxes and 10% fee.
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Great video, I live in California, I'm gonna open an Ohio 529 today, thank so much!
Awesome!
Hi Clint Hightower, What makes you choose Ohio?
Thank you so much for all details. I was so confused which one to pick I live in CA but picked Newyork529
Congrats on getting started!
Very nicely explained. A tabular representation of the relative performance of the mentioned plans would have been more helpful to understand the relative merits and de-merits and decide on one.
Thank you for the excellent video. As a California resident, this is super helpful.
This was very easy to understand and straight to the point. Thank you for your guidance on 529 plans and how they work!
Thanks for watching!
Awesome video. Just what I was looking for. Thank you!
I live in NY and recently opened a NY 529 plan. Hopefully I will see great a ROI in 18 years
I hope so too!!
I actually do have a 1 yr old now. I have the FL 4 yrs prepared & I put in equal amounts in the NY plan after this video.
Hope this video helped!
I’d use the college inflation rate as opposed to the general 3% inflation rate. From 2001-2021, the average tuition inflation rate was 4.8% per year at public two-year colleges and 3% at private two-year colleges.
Excellent information, thanks for sharing
Glad it was helpful Mark!
Hi Tim! Great information! As a California resident, if I enroll in the Ohio 529 plan, are there any considerations we should consider? Is there one you would recommend for a California resident? thank you in advance!
The best 529 plan is to use a Vanguard low cost/expense model, offcourse, this is valid for states that dont offer any tax benefits.
Super helpful, thanks!
Anytime Clay!
thank you! very informative
Glad it could help!
An interesting point to note, the IRS does not currently require states to account for assets held in other state's 529 plan. Meaning you could contribute millions of dollars into 529 across the country.
Wtf??? Ridiculous
Awesome video and thank you! I initated a 529 plan with fidelity , however they only offer me specfic states which none are even close to Gold or silver rated like with morning star.
I live in Fl btw but have a military home of record of Tx, if it even matters.
Any advice? Should open account else where to get more options?
Hey there, good question. Where you live or your child plans on going to school does not matter. You can invest in any state. I would look pick the State's plan you want to invest in, then choose a broker that provides that State;s plan.
@@TimWolffe Thank you so much for the feedback !
Hi Tim, thanks for posting the video. Quick qu. If our kids decided to study overseas, what sources might we look for to find out which international colleagues can make use of the 529 plan?
My son is in 9th grade, he will go to college in 2026. Which one do you recommend to start investing? I know it's short period of time. Please advise.
Hi, I am in the same boat. From the video, looks like New York or Ohio would be the most likely plan. Please confirm.
Hi Tim, I live in New jersey, so there is no point in me investing in a 529 plan which is from New Jersey. Does that mean i should invest in another states 529 Plan for example the New York's 529 program. Will that allow me to save tax if i invest in another states 529 Plan since i am from New Jersey.
I Subscribed 😊
You're the best!
Hi Tim, if I live in Georgia, and we are military basically we move a lot, do you think NY 529 will be the best option? If not what's your advice?
I think the NY one would be a good option
Nice video! What is the best way to estimate what any college tuition will be in 10 - 15 years?
On average college tuition goes up between 6.5% - 8% every year. Meaning the cost of tuition will double approximately every 9 years. So you can look online at tuition cost for schools in your area and times that by 2 to 2.5 and you should have an estimate.
According to Chase it will be 517k for private and 225k for public college.
What about Florida 529 plan?
Hello, newbie here, so my grandmother has an investment stock that she wants to pass down to my two children (7yrs and 2yrs)was considering putting the lump sum in a kids ira but they are not employed, would you suggest 529 NY to be a better option? And why?
What can i do if i want to save in the Nethetlands for a good college. My daughter is 3.5 and i am saving with my dad together also my aunt. She gets 3 bucks from me every week in her pickybank. The cashback savings are around 300 - 500 euros each year. And she has an auto on my acount that gets her 15 euros each month. My aunt gives her 2 euros each week and my dad around 20 i think each month i dont know that. But the colleges and intutitions are around 7000 to 64000 euros. They go around 16- 18 years into college. We have a lot of levels of high school vmbo you can go to a college where you can do baker, truck driver, nurse, hairdresser or something with cars electrics plumping you get it. These are around 7000-10.000 and the higher Havo teacher and managment or journalistism costs 20000- 30000. VWO Gymnasium the highest in high school Levels Doctor proffessor on a college teacher, pilot. Costs 40.000 to 64.000 or sometimes 70.000. How much should i save each month when she goes to college in 13 or 15 years. You can go everywhere to college here. The only problem is you pay a rent room at least 400 500 euros.
I am not familiar with Netherlands tax beneficial accounts so I don't think I am of help here. I do know that Americans who have 529 plans can use their 529 savings at International schools but I don't know about Netherland citizens.
How much put in the 529 plan? If I have 3 kids ? Thanks to your video I am now thinking Utah.
Based on the calculations I've done typically a minimum of $150 per kid per month if you start when they are a baby. If they are already toddlers you would want to put about $250 per month. If you want to pay in full for them to go to one of the more expensive private school you're looking at $400-$500 per month
@@TimWolffe Tim thank you for the same. I selected Ohio 529 plan is that good ?
@@prasadbhojak Ohio is a great choice. One of the most popular ones out there,
Why do states have 529?
So if I want to invest in Utah’s 529 plan from Texas I can do it with no penalty as long as I invest it in my child’s education?
Correct. Texas is a good example of utilizing other State's 529 plans because there is no state income tax in Texas, therefore there is no extra benefit to investing in Texas' 529 plan as opposed to Utah.
Great Video. I have Twins. Should i open 2 separate 529 accounts or just have one ?
I would do 2 separate ones.
@@TimWolffe thank you. Can you help me understand the reason behind it ?
@@ChandanKumar-em8zg 2 accounts motivates you to contribute more and is very black and white when it comes time to use it on your kids. Instead of having to split the account and calculate what a "fair" split would be (accounting for future inflation & compound interest) it's easy to know exactly what's fair.
Also, some plans hold funds in trust so the account isn’t considered as part of an estate for civil or liability claims.
Which state is that?
@@handsome567 Alaska is one of them... They use John Hancock and a core benefit I highlight with my clients.
Why some state has better performance, I thought it’s based on whatever stocks or funds that you choose?
It's based on what stocks the state chooses, you don't chose what stocks the state's 529 is invested in.
oh which means you can not choose which stock do you want to buy? I thought i can for example choose sp 500?@@TimWolffe
I recommend The College Specialist based in Irvine California. You can find his website online. He really can help.
I live in Indiana. Should I invest in 529 plan in Indiana or Utha?
In my opinion Utah has a better plan
I’ve been considering Ohio‘s 529 plan only thing holding me back is if my kid doesn’t use it to go to college how much are the penalties to withdraw it? I was thinking either way if you only get taxed on the growth it’s still better than the money just sitting in a savings for now correct?
If you do not use the 529 for educational expenses you would pay a 10% penalty and taxes on the gains. One way to look at it like you're alluding to- As far as taxes, you would have paid that anyway if it were invested in a regular brokerage account and if the money is invested well (averaging 10% ROI/year) then the 10% penalty would really only discount the last year of gains you had in the 529.
Keep in mind, this plan can be used for different types of schools beyond colleges or universities such as culinary schools, vocational schools, and even dance schools.
Hello...I am not a US citizen(working in US on H1B visa)but a resident alien but my kid is US citizen...can I still open an account for my child?..suppose I moved out in 3 years back to my country..when my child come back for the college to US can he use that money that time?...if I died my beneficiary will become owner when he comes to age?can I contribute outside of US as well?
In order for yourself to open the account for your child you need to be a US resident or resident alien, have a social security # or Tax ID #, and have a US address. If any of those three things were to change you would no longer be able to have the 529. The beneficiary of the account would be whoever you put as the beneficiary, if it's your child then yes once he becomes of age. And no you would not be able to contribute money made outside of the US.
I stay in CA and want to enroll in Ohio plan?Would I be able to claim tax deductions on the money investment in Ohio plan staying in CA state ?
Yes.
if i invest in the Illinois 529 plan and my kid goes to college out of state, do i get taxed on those educational expenses?
No
Newbie here. So if I choose NY, it isn’t just one set investment or are there choices within NY plans?
You personally only have to choose to invest in the NY plan as one investment. And what you're getting within the plan is a combination of investments (stocks, mutual funds, etc) but the allocations of what the plan is invested in is out of your hands. That is up to the people that run the plan.
@@TimWolffe So the fees, returns, performance is as a whole for the NY 529? Sounds easy enough, I am in if that is the case.
@@luisreviews6412 yes
@@TimWolffe I had the impression that I had to pick something with the NYC plan and that got confusing fast.
If I live in NJ and I chose NY 529 plan . How do I pay taxes on the money when I file my taxes ?
You don't have to pay any taxes on money withdrawn from a 529 plan as long as it was used for educational expenses.
You don’t pay tax going in to the plan because the money you contribute into the 529 has already been taxed (just like putting money into a Roth IRA). You don’t pay tax on withdrawals as long as it’s used for qualifying expenses. I live in Texas and use NY’s 529.
@@CJ_18 Can I deduct my contributions on the NY 529 plan when I file for NJ taxes? Thanks in advance
@@LuisMunoz-pi3nc no, not that I’m aware of, but I’m not a tax accountant. I believe you pay taxes on the money (eg not deduct it from your taxable income) just as if it were a Roth IRA contribution, but benefit is that when the dollars come out there is no associated tax on the gains if used for qualifying education expenses.
Hey Tim, had a quick stupid question. I opened a 529 account for my son using Fidelity but not sure which state I choose. I live in NJ but can't recall Fidelity asking me which state plan I wanted to use
First thing is I would make sure you actually are investing the money within the account and it is not just sitting in a 529 account univested (I've seen that before and it's devastating when the person finds out 15 years later the money was never invested it was just sitting in the account like a bank checking account, earning no compound interest).
Second, when you log into your account, Fidelity should show you in the overview of your account what you are invested in. If the investment has the State's name in it that is easy but some don't and they are called weird things, just google it and see what State plan it is.
Third, if you are still not sure you probably should call Fidelity and ask what plan your 529 is invested in.
What if you child goes to college outside of the US?
Americans who have 529 plans can use their 529 savings at International schools
What happens if my child gets a full scholarship tomorrow, what can I do with the money saved in NY’s 529 Plan?
You can use it for anything the scholarship does not cover: tuition, room and board, fees, books, laptop. Or you can change the beneficiary to any other family member (another child, you etc..). Or if you choose to withdraw the money you will pay taxes and 10% fee.