Thursday, April 17, 2014

Give the Gift of a College Education with a 529 College Savings Plan

This sponsored post was written by me on behalf of TIAA-CREF. All opinions are 100% my own.

Hubby paid his way through college by working full-time and still managed to graduate with a bachelor's degree in four years. As much as I hope Buddy will pay for some of his college education himself, I certainly hope Hubby and I are able to take most of the load off by helping him pay for school.

Although Buddy is just 5 years old, it's by no means too early to plan ahead for his future. There are many ways to be financially smart for the here and now. But sometimes we overlook the distant future, thinking it's just not important to focus on yet. However, beginning to invest in our childrens' future as early as possible is the best way to ensure a nice cushion for their college education and for the brightest future possible.

For one very special Elk Grove, California elementary school student, hoping to attend college will not just be a dream, but a reality. Last Friday, nine-year-old Duncan Nakamoto received the surprise of his life as he learned he won TIAA-CREF's Big Dreams Start Small $100,000 College Fund Contest.

Entrants in this nationwide contest submitted a photo and caption showing their child "dreaming big" for the future. Duncan's winning entry was revealed at a school assembly in front of 800 schoolmates, faculty and parents at Joseph Sims Elementary School. It was so exciting to be there and see Duncan's reaction to the news. To say this lucky kiddo was thrilled is a major understatement!

Duncan's father will receive $100,000 to be deposited in a new 529 college savings plan account until Duncan is ready for college. What a gift Duncan has received for his future!

What is a 529 college savings plan?

A 529 college savings plan, or simply called a 529 plan, is a tax-advantaged investment account for families to put aside money for their kids' college education

TIAA-CREF is one of the leading 529 plan service providers around and currently manages the ScholarShare 529 college savings plan in California. Each state sponsors their own 529 plans, and you can open one in any state you choose depending on your needs. The beneficiary can attend any school in the country, no matter what state the 529 plan was opened.

The funds from a 529 plan can be used on tuition, books, housing and more at most accredited colleges, universities, and vocational and technical schools nationwide. Pretty much any college expense qualifies for use of 529 plan funds.

As the 529 plan account holder, you designate the beneficiary. Whether it's a child or grandchild, a niece or nephew, or even yourself, you have control of the 529 plan funds. The beneficiary can be changed, and you also determine distribution.

Once a 529 plan has been opened, family, friends or anyone can contribute. This is a fantastic way for anyone who wishes to pitch in, to do so. Also, initial contribution requirements to open a 529 plan can be as low as $25, and most 529 plans do not require regular contributions.

529 plans allow you to invest and grow college savings federal tax-free. As an added bonus, in California legislation was passed that provides a 20% state tax credit on for ScholarShare (California's 529 plan) contributions of up to $2,500 (for qualified individuals). Be sure to check with a representative of TIAA-CREF for more information on choosing the 529 plan that's right for you.

A 529 plan is definitely a smart way to help fund a college education little by little over many years, so there's no better time to start planning ahead for your child's future than right now. The gift of higher education is one of the best investments you can make to help him reach his potential in life!


MikiHope said...

This is one of the better plans our government has come up with! If I had children I would definitely have started one and I have, as a bookkeeper, recommended others to start one. A college education is important and money should not be the reason your child can not go! You can save little by little!! Congratulations to Duncan!!

Ellen said...

Sounds like a great way to save for college. My daughter is getting grants, scholarships & working her way through.

clc408 said...

This is such an important topic. Too many people think it's OK to let kids get through on student loans and saddle them with a lifetime of debt.

Linda Meyers-Gabbard said...

I didn't get to go to college because unfortunately my parents could not afford it.
When it came time for my baby brother to go (13 years younger) they still had not prepared for him to go so he and the parents took out student loans. It took him many years and many different schools and many student loans for him to finally figure out what he wanted to do when he grew up.
He is now a very successful and talented graphic design artist. He is 40 now. Married and a father of a very smart 2 and 1/2 year old
that us definitely going to go to college.
Her grandparents and parents and myself and my hubby are planning for her college education. We are all going to make sure the funds will be there for her.

S. E-C said...

I'm curious what the higher education system will look like when my son is looking to enter (and I say this as someone working in higher education administration) - I'm truly hoping for an overhaul of the system, such that the exorbitant costs of even a middling education will be a thing of the past. Perhaps that is too much wishful thinking - but I DO think that things as they are now are unsustainably expensive (and not just as stress on students, though this is of course a primary concern).

I put myself through school on scholarships, and some loans. I was dumb about money, though, more than anything - I took more in loans than I ever needed, and spent too much of that money on things that I don't even have. The way that we think about the costs of college needs to change, and along with that, the ways that we prepare our children to think financially. And that definitely includes saving (in programs like this!) and teaching our kids to do the same.

joanna garcia said...

MY husband and I would love to do this for each of our kids this is a great way to start their road to education. Love that anyone can give money which is great as an alternative to gifts! Love that they can go to any school in the USA too!

teresa herrera-honores said...

I put myself through school through scholarships and loans and this would be a great stress reliever for our kids to know they can go to school and not have to worry about repayment. the cost of education continues to rise and we need to help them as much as we can!

Christina Chin said...

This is a great idea since college has become so expensive.