{"id":4733,"date":"2015-07-08T22:00:09","date_gmt":"2015-07-09T05:00:09","guid":{"rendered":"https:\/\/americanretirementadvisors.com\/?p=4733"},"modified":"2015-07-08T11:04:00","modified_gmt":"2015-07-08T18:04:00","slug":"financial-tip-of-the-month","status":"publish","type":"post","link":"https:\/\/americanretirementadvisors.com\/financial-tip-of-the-month\/","title":{"rendered":"Financial Tip of the Month"},"content":{"rendered":"
Acing your 529 College Savings Account<\/em><\/strong><\/h5>\n

Although avoiding mistakes regarding your 529 plan is desirable, it may be of comfort to know that you cannot make a catastrophic mistake when it comes to these accounts.\u00a0 With the state eager to remain competitive, fees are driven lower and lower, while there will also always be the option to roll this plan over into a different 529 plan.\u00a0 With that said, here are some tips to avoid common mistakes the first time around with your 529 college savings account.<\/p>\n

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Contributing the wrong amount.\u00a0 <\/strong>The first potential mistake can arise when choosing how much to contribute to the account.\u00a0 Both issues of either contributing too much or too little can have repercussions of their own.\u00a0\u00a0\u00a0 College expenses are consistently on the rise, and the average American family cannot afford their child\u2019s college degree outright.\u00a0 Due to this unfortunate reality, states have made sure to have a low minimum contribution payment for these accounts.\u00a0 However, if you are keeping college savings in a taxable savings account, opposed to the 529 plan account, you are certainly contributing too little to your 529 plan.\u00a0 On the flip side, contributing too much to your 529 plan can result in a 10% penalty tax when you withdraw this money.\u00a0 This can be viewed as a good problem, as you are still reaping the benefits of the liquid and tax advantaged 529 savings account; however, some may wish to avoid this these particular
\ntaxes altogether.<\/p>\n

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Ignoring the fine print.<\/strong>\u00a0 Another common mistake is assuming that the money put into your 529 plan will be available for any expense related to college.\u00a0 Of the many costs that go into your beneficiary going off to college, not all of them are qualified expenses; for example, off-campus student living, transportation, or student loans.\u00a0 It is important to be informed of all restrictions and qualifications before deciding how much to contribute to your 529 college savings plan, and how much to leave out for the non-qualified expenses.<\/p>\n

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Ignoring the gift tax exclusion.\u00a0 <\/strong>Many people also simply don\u2019t know they can take advantage of gift tax exclusion by participating in a 529 college savings plan.\u00a0 According to federal law, 529 plans are considered gifts, and allows many contributors to avoid estate taxes.\u00a0 You can contribute up to $14,000 a year to your beneficiary\u2019s 529 plan without incurring any federal state tax.<\/p>\n

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Using this account as an emergency fund.\u00a0 <\/strong>Withdrawing money from your 529 saving account will result in a 10% penalty on top of being taxed on the earnings.\u00a0 Needless to say, it will also make saving a sizable amount for your beneficiary
\nmore difficult.<\/p>\n

[spacer height=”20px”]<\/p>\n

Waiting to save.<\/strong>\u00a0 Another unfortunate mistake made by many families is starting a college savings account too late. \u00a0You can start a 529 savings account before your child is even born, giving this type of account the potential to grow into a sizable nest egg for your child or other beneficiary to use for their education.\u00a0 It is never too early to start planning and saving for something that will be so valuable in the future.\u00a0 In the case that your child is born a star athlete and receives a full scholarship (which is notably rare), these accounts can be used for different beneficiaries or can even be used for yourself, thus, leaving no excuses to put off college savings for your loved ones!<\/p>\n

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Follow this link for the full version of the July newsletter: \u00a0<\/em><\/strong><\/p>\n

https:\/\/americanretirementadvisors.com\/wp-content\/uploads\/2015\/07\/2015-July-Newsletter-www-americanretirementadvisor-com-Final.pdf<\/a>\"American<\/a><\/p>\n

\"American<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Acing your 529 College Savings Account Although avoiding mistakes regarding your 529 plan is desirable, it may be of comfort to know that you cannot make a catastrophic mistake when it comes to these accounts.\u00a0 With the state eager to remain competitive, fees are driven lower and lower, while there will also always be the […]<\/p>\n","protected":false},"author":1,"featured_media":4736,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4733","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nAmerican Retirement Advisors 800-568-1095 Expert Advice<\/title>\n<meta name=\"description\" content=\"Acing your 529 College Savings Account\" \/>\n<meta name=\"robots\" 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