Calling all new 'rents and financial gurus: Suggestions and tips for starting a 529 plan?

[LordSnailz]

Did a good search on 529 plans and found a mountain of information. How do you decided what is the best 529 plan out there? FW has a pretty big thread on it but it's pretty dated.

Also cnn has recent link about 529 and ranks the top 29 529 plans out there, guess it's a good thing California is in there since I'm from that state.
http://money.cnn.com/magazines...007/table.instate.html

Any suggestions for a noob on how to pick one of the top 29 or what should be in the selection criteria?

In the article is says -
"Tax-free withdrawals from 529s are now permanent, they don't hurt chances for financial aid and the offerings are better than ever. In other words, you'd be a fool to save for college any other way but in a 529 plan."

It mentions that it doesn't hurt your chances for financial aid, can someone clarify? In the past, people would get their grandparents to fund the acct. is that not the case anymore?

Does anyone know if the CA plan allows you deduce from your state or federal income tax?

 

[neomits]

Have you looked into an ESA? I'm neither 'rent nor a financial guru, but I know it is an alternative.

Main differences being:
ESA is limited to 2k per year investment, must use by age 30 of child, but free to invest in whatever you want and allow you to use funds to pay for computers, internet access, supplies, and other things necessary for school, not just tuition and board. 529 plans only allow funds to be used for room, board, tuition, and fees. Also ESAs can be used for private school at any level. 529 is only for higher education

both grow tax free if used for education

Something to think about

 

[LordSnailz]

hmm, from what I've read, 529 gives you the best benefits since it grows tax free and withdrawals are also tax free. I'll read up on ESA, in the meantime any more suggestions/tips for 529?

 

[vi edit]

I really like the Iowa 529 plan.

http://collegesavingsiowa.uii.upromise.com/

It invests in Vanguard index/mutual funds and can by used for really any college your child could choose.

 

[blackdogdeek]

the only thing i know is that we got a mastercard that deposits some percentage of purchases into the account.

 

[ponyo]

http://clarkhoward.com/shownotes/category/7/76/215/381/