529 College Savings Plan Explained

Рет қаралды 190,016

6 жыл бұрын

Today we're talking about the 529 college savings plan explained. So I'm going to go through some of the significant points of the 529 plan, things that I think are important to give you a good understanding of how you can use the 529 plan for your son, daughter, grandchild, or whichever beneficiary you choose for their 529 college savings plan.
I'm also going to talk about one point that I don't think is enough, and I think it's a considerable risk of the 529 plans. And I'm also going to make another video and post explicitly talking about this issue.
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Here is the blog post of the 529 College Savings Plan Explained bit.ly/3qxZe0e
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Пікірлер: 160

@TravisSickle Жыл бұрын

Ask questions on our discord chat: Join Link discord.gg/enuJThjHJ9

@henryportillo2343 4 жыл бұрын

One thing I love about the 529 is I’m 23, I don’t have any kids and I am currently in school. I opened a 529 with myself being the owner and beneficiary BUT I don’t intend on using it, I am contributing to it so that in the future if I have kids they can use it. The benefit I see over this is using compound interest to the advantage and start saving for them even before they are even born.

@TravisSickle 4 жыл бұрын

Love it. Good work!

@nanlinr 2 жыл бұрын

What if you don't end up having kids though?

@henryportillo2343 2 жыл бұрын

@@nanlinr since I’m the owner and beneficiary of it I have some flexibility, so if let’s say I didn’t have kids and passed away from my understanding the 529 won’t be part of the owners estate but would be part of the beneficiaries estate (but I’m both), if I didn’t have kids I could transfer the 529 , and in the event that I wanted too I could touch it for reasons not related to education and pay any taxes and penalty and use the funds as I wish. Personally for me I understand that would suck but it’s all part of planning for me, the benefits outweigh the cons at least for myself.

@nanlinr 2 жыл бұрын

@@henryportillo2343 That's a good point. Thanks

@myfate111 2 жыл бұрын

@@henryportillo2343 thank you for that

@gmoney5947 5 жыл бұрын

Twins just turned one on Tuesday. I opened a 529 for both on Monday ($75 a piece). By time they get to college and if I put in $50 a month then they should both be able to buy a nice pencil by time they start school. My first semester was $2800 my last semester was $4400. Fortunately I had a dad with $$. I don’t make half of what he made so I really have to start early. And if it tanks when they’re 18. They can get a job for 2-3 years because I sure as hell didn’t know what I wanted at 18. I’m 32 now and I still don’t know what I want to do.

@irregularmana6216 4 жыл бұрын

Wow, my daughter just turned one and honestly one of the first things I thought was college savings. I'm 31 and have a good job, thanks to college, but I also dont know what to do with my life, I'm just doing this to pay the bills and buy shit I want when I want it lol

@nikkikissem8712 3 жыл бұрын

I'm not alone 😭😱. I'm 31 with 2 kids. The amount of stress from bot knowing has given me complete anxiety.

@pennywrightbush6681 3 жыл бұрын

So G Money, let me ask you a question; what happens if your child doesn't go to college? The 529 is only for college. You can't use it for anything else 🤷

@gmoney5947 3 жыл бұрын

irregular mana you’ll be taxed like any other investment. The penalty is 10% on earned interest. Of course the market could crash and I could lose it all.

@gmoney5947 3 жыл бұрын

Penny Wright Bush actually it’s just like the stock market, the benefits of a 529 is that if it’s used for college the the earned interest is tax free, if your kid gets a full ride you’re penalized 10% of the earned interest. So if I put in $40k and at the end it’s worth $48kand both twins get a free ride then I’ll have to pay 10% on $8000 or $800. I’m trying to be nice, but why didn’t you just google it?

@TravisSickle 2 жыл бұрын

Here is the blog post of the 529 College Savings Plan Explained bit.ly/3qxZe0e

@norcalastro8798 5 жыл бұрын

You answered my question within the first 90sec. Thanks!

@norcalastro8798 5 жыл бұрын

@@TravisSickle Before or after tax.

@wackzingo 3 жыл бұрын

A benefit that I think is overlooked if I'm not mistaken is that the funds can be used continuing education. If you have a child that doesn't use all their fund you can simply name yourself as the new beneficiary and use them to fund your continuing education.

@TravisSickle 3 жыл бұрын

That’s an excellent point.

@PieceOfThePieWithTy 3 жыл бұрын

Thanks man definitely help me understand the 529 plan more.

@TravisSickle 3 жыл бұрын

Glad to help

@jesulousesteban571 4 жыл бұрын

It’s better to open an Index Universal life. If child decides not to go to college he/she can use the money to buy a house, car or start a business or whatever they need the money for. IUL has Tax free withdrawals/loans. There’s growth, safety, tax advantages, and protection that 529 doesn’t have. 529 affects the students ability to get financial aid bc it counts as an asset. IUL does not.

@mauricio-from-chi-town 4 жыл бұрын

Im an insurance agent il check out our indexed UL plan

@shannonland1137 3 жыл бұрын

That’s amazing information

@onelliadurbin1654 3 жыл бұрын

Wow..thx

@tylerarndt8218 2 жыл бұрын

Is this similar to an UGMA/UTMA?

@TravisSickle 2 жыл бұрын

No, a UTMA is simply an account in a minors name. The IUL is an insurance policy.

@jodyd7957 4 жыл бұрын

Thanks for the info....gotta 10 year old I need to get going on securing a plan for her college future. Your commentary helps!

@amilyaaa9425 3 жыл бұрын

Same my kid is also 10

@TravisSickle 2 жыл бұрын

@@amilyaaa9425 which plans are you using?

@heeebeeegeeebeee 2 жыл бұрын

Helpful, thanks!@

@sharkandtheoldmanshooting4040 2 жыл бұрын

Just started watching your videos today. I’m right in the middle of kids and college plans. Great information for an investment newbie such as myself. Thanks!!!

@TravisSickle 2 жыл бұрын

Which plan did you choose?

@victorcordero1458 2 жыл бұрын

So i can drop 50k in there n let it sit

@TravisSickle 2 жыл бұрын

@@victorcordero1458 you can, just make sure you invest it.

@victorcordero1458 2 жыл бұрын

@@TravisSickle oh i thought it just builds interest overtime lol..

@TravisSickle 2 жыл бұрын

It could if you just leave it in a money market but that’s not smart. Just watch my other videos on my 529 plan.

@speedsterwinston 4 жыл бұрын

Yeah. I feel like I know a lot about 401k and IRA but this doesn't make a lot of sense. What if my kid decides he wants to be a construction worker or join the military? Then I have to pay more taxes on it and also get penalized 10%!?

@jayf9553 3 жыл бұрын

Hey @Travis Sickle great video, was curious on the video you said would be at the top. One that talks about the better strategic choices when picking the funds for the 529?

@TravisSickle 3 жыл бұрын

kzfaq.info/get/bejne/odeCpb2TzKq9mWQ.html

@edgarvalenzuela9534 2 жыл бұрын

was doing some research on savings for college ...the algorithm re-directed me to this page ....

@Sayless_jess Жыл бұрын

I feel like I’m behind. My daughter is about to be 13 and my youngest is almost 3 I need to get started right away!!! Knowledge is power for sure!

@TravisSickle Жыл бұрын

Just do the best you can today. It doesn’t all need to be saved today. Continue throughout their college time too.

@fuegobay Жыл бұрын

Same- have twin 13 year olds and we started late being parents- closer to retirement. Going to look at opening a 529 soon.

@juancrespo5506 Жыл бұрын

This was the best video gzzzzzzz

@PorchaPea 5 жыл бұрын

I’m so confused

@samanthamitchellprete5646 2 жыл бұрын

I need to do this.. My oldest starts going to college in 11 years she's 6 years old right now and then I have my youngest which is about to turn 3 this month but I want them to give them more opportunity that my parents weren't able to do, both of them did not go past high school and so because of that they could not really help me pay for my college so I didn't go which is now struggling trying to get the money and get shit together now to get back to college and I don't want that for my kids so this is a great tool for me to save money for my girls so they can go to any college they want and have options open instate or out of state and they can go wherever they're dreams and hopes desires

@peterazpeitia4715 2 жыл бұрын

The money left in the 529 plan after school..we’re should it be put into thank you

@ProblemSolverUS 4 жыл бұрын

10% penalty and income tax if you don't spend the money on college??? I would understand only if those dollars haven't already been taxed (similar to traditional IRA or 401k) but certainly not in this case. We're better off investing in mutual funds directly or just putting the money in a CD and have control over it.

@TravisSickle 4 жыл бұрын

The growth portion is what’s taxed. You won’t get double tax. The real issue with investing in CDs is college inflation is historically higher than regular inflation. So getting 2-4% in a CD defeats the purpose of investing.

@mariaflores3109 2 жыл бұрын

My daughter just started grad school. I prepaid her tuition and school fees as well as books, modules, etc. So far I have about $12,000+ qualified expenses. What happens if I take funds from my account that ends up exceeding the cost of this year’s college-related expenses? Will I get penalized for the unused portion even if it’s my own post-tax money I set aside? Is there a limit on how much per year I as the owner can take out? I know that it’s just the interest portion that will be taxed IF not used for college-related expenses. If I took $20K, would that mean I’ll be in trouble (penalized through taxes) for interest of the $8K if not used up for qualified expenses this year?

@TravisSickle 2 жыл бұрын

Only gains have the taxes and penalty. Only the portion not used for college expenses too.

@partypeoplesandiego 2 жыл бұрын

What about Trade Schools and/ or coding schools. Can 529 fund non-traditional post secondary education?

@TravisSickle 2 жыл бұрын

Yes. It’s possible just check with the trade school to see if they qualify.

@AW-qz4kk 4 жыл бұрын

What's the song at the end of the video? Sounds like the one used in the minecraft trailer

@WeNeedLights 4 жыл бұрын

Should I continue contributing to my daughter 529 considering the stocks have gone down?

@frsurcin1 4 жыл бұрын

Yes, buy more now!

@charliemitchell7333 2 жыл бұрын

From my understanding, if I'm a part time graduate student and name myself as the beneficiary, I can use the funds from the account to pay for rent, utilities, internet, computer, etc. Am I understanding this correctly or am I missing something?

@linearmemories Жыл бұрын

That is also my understanding

@alimakingherway8714 2 жыл бұрын

About to start this for my 1 year old 😌

@TravisSickle 2 жыл бұрын

which plan did you choose?

@alimakingherway8714 2 жыл бұрын

@@TravisSickle honestly fell on tough times so we didn't end up doing it but we've gotten back on our feet now so that's our next step.

@TheMichael408 5 жыл бұрын

Can I use a 529 plan and open one while im in college? I'm planning to transfer to to a 4 year next year.

@TheMichael408 5 жыл бұрын

Sickle Hunter Financial Advisors I figured. Thanks for the prompt reply!

@paulkeilman3510 Жыл бұрын

Thank you for this video. We are just starting to fact find. If say a child decides they want to go to a culinary school, would you suggest contacting that school directly to see of they participate?

@TravisSickle Жыл бұрын

Yes, when you get into the trade schools you can reach out to the school because they'll know if they qualify. You can also check it out here... ope.ed.gov/dapip/#/home

@paulkeilman3510 Жыл бұрын

@@TravisSickle Thank you very much. Enjoy these videos.

@sheshankkodam 3 жыл бұрын

Are admissions in international schools (Australia, India), hostels, and other miscellaneous expenses qualified under 529?

@TravisSickle 3 жыл бұрын

Some international schools but not misc expenses.

@OQN2 3 жыл бұрын

I live in Puerto Rico. Can i do a 529 on a different state and uses of a college in my state?

@TravisSickle 3 жыл бұрын

Possibly, depends on college.

@lundany2712 2 жыл бұрын

Can you also invest the money you put in 529 in stocks, etfs while it’s sitting in there?

@TravisSickle 2 жыл бұрын

It's restricted to the investments inside the 529 plan.

@Ddstairclimber 5 жыл бұрын

dude I think you're wrong if I understand correctly from your video to implying that it has double tax advantage being contributions tax deductible and distributions not taxing the gains but I think the only benefit is the later one

@1992ilikepie 5 жыл бұрын

Some states elect to have an income tax deduction for contributions on top of the earnings being tax free.

@progressforamerica6883 4 жыл бұрын

Would love to findout which states offer the state tax deduction and which ones with the lowest and fees and highest perfomances. And whuch ones has both.

@willmayoparaugo8360 2 жыл бұрын

What do u think about U nest?

@sarahbarnes3051 2 ай бұрын

I wish i would of known to start this 16 years ago. Now i feel its to late to start daughter is 16 now. Im still in debt of my own college education. Wish my parents would of known of this.

@TravisSickle Ай бұрын

Do you get a state income benefit on your contributions?

@kevinr5187 Ай бұрын

What type of short term investment plan would be good for 5-10 k over a year or two years before withdrawing to apply an education?

@TravisSickle Ай бұрын

answered here kzfaq.info/get/bejne/mqepaayJ2uDSY5s.html

@person-yk7kn 4 жыл бұрын

Do the 529 plan is like a roth ira where, the money you invested multiplies over time?

@TravisSickle 3 жыл бұрын

No, that’s not right. RMDs are only for traditional IRAs and it’s moved to 72.

@charyjackson2864 4 жыл бұрын

Can you explain the gift tax? If a child uses more than 15,000 a year on school they have to pay taxes?

@TravisSickle 4 жыл бұрын

Gift is on the contributions. The payments for school or distributions are unlimited.

@charyjackson2864 4 жыл бұрын

Travis Sickle so as long as you don’t contribute more than 15,000 a year into the 529 then you don’t pay gift tax?

@mauriciocastro6363 Жыл бұрын

It looks like the 529 plan is tisky for few reasons, if my kid at the end find another way to have a career than going to college, I will have to ay taxes on those saving. What kind of interest return can I get from a 529 plan? What other ways are to save for college?

@TravisSickle 11 ай бұрын

checkout my channel for other ways to save...hindsight is always 20/20. a lot to unpack to give a clear answer.

@PiwFun Жыл бұрын

Hello my son in grade 10 right now,but i never know about 529 ,but i save some money in the bank for his college,but not much ,so what advice you can give to me please.

@TravisSickle 11 ай бұрын

What is your question?

@mamtasaravanan985 3 жыл бұрын

My son is already a sophomore and 2 years away from college.Can i invest a lumpsum amount in 529?

@TravisSickle 3 жыл бұрын

Yes

@abhishes 4 жыл бұрын

So if its mutual fund like .... can your 529 college fund lose value? if the stock market goes down?

@TravisSickle 4 жыл бұрын

Yes

@abhishes 4 жыл бұрын

@@TravisSickle So how do I start a 529 for my kid. the stock market is at an all time high and there is uncertainty because of upcoming election and its results.

@abhishes 4 жыл бұрын

Assuming that I want to start with a lump sum and then contribute monthly.

@TravisSickle 4 жыл бұрын

Abhishek Srivastava do you think the market will be higher or lower when your child goes to college?

@justinpasch2017 5 жыл бұрын

So it's taxed twice? Once when it goes in,and again if you put too much in? Sounds like garbage. Better off putting it into and index fund and taking a hit only once.

@progressforamerica6883 4 жыл бұрын

Where are you getting taxed twice?

@metaltyphoon 4 жыл бұрын

@@progressforamerica6883 The fact that is after taxes

@henryportillo2343 4 жыл бұрын

You get taxed on what you put in, the growth is tax exempt if used for college or k-12. What he meant in the video by getting taxed twice was IF you put in more than will be used, the amount that isn’t used and isn’t transferred to another beneficiary, if you wanted to use it for anything else, the gain would be taxed but you’d also get a 10% penalty.

@sarahbarnes3051 2 ай бұрын

Can you change beneficiaries?

@TravisSickle Ай бұрын

yes

@raymondfurgason8959 3 жыл бұрын

Play on 1.5x speed

@TravisSickle 3 жыл бұрын

I watch almost all youtube videos on 1.5 - 2x If I speak faster people complain. Oh well.

@progressforamerica6883 4 жыл бұрын

Can I start one if I am over 18 already for myself?

@renesanchez53 4 жыл бұрын

yes, as long as its used for college,

@MrsCourt 2 жыл бұрын

But what if you kiddos don’t end up going to college 😓 what then?

@TravisSickle 2 жыл бұрын

Roll to another child, or cash out with penalty of growth.

@milanimorales2645 Ай бұрын

Its awful that the limit is 15,000 annually. What if the school is $100,000 per year and my son is turning 8. I want to send him to private high school. So I only have five years to get to $400,000. I gotta get a lawyer to look at that. I guess its never too early to start saving folks. Looks like I'm too late.

@TravisSickle Ай бұрын

Posted a response in Members section on this question.

@obbybubbla2884 3 жыл бұрын

@TravisSickle 3 жыл бұрын

No good?

@kevinduong2068 5 жыл бұрын

529 plan or a CD account for college savings. Thoughts?

@kevinduong2068 5 жыл бұрын

10 months

@Sam-rk2pb 4 жыл бұрын

@@kevinduong2068 lol

@tomatojuice12 3 жыл бұрын

Does the money have to be used for education? And what happens if I start this fund for myself and I don't end up having kids?

@TravisSickle 3 жыл бұрын

Yes.

@josec8896 5 жыл бұрын

Does it hurt my financial aid?

@jamesmoore7350 4 жыл бұрын

Yes!

@mamtasaru 3 жыл бұрын

@monical4111 3 жыл бұрын

Can you be both the owner and beneficiary of a 529 plan?

@TravisSickle 3 жыл бұрын

Yes

@TravisSickle 3 жыл бұрын

This would be a good setup if you’re planning to save for a future child. Not a huge benefit otherwise.

@jakez3171 4 жыл бұрын

My son just turned 1. About 6 months ago I placed $1k into an after tax investment account with Fidelity not really knowing about the benefits of a 529. Problem is I’m afraid to touch it now because the funds are the best performing in my whole portfolio! Probably just need to throw another $1k into a 529 and start over.

@TravisSickle 3 жыл бұрын

I'll bet the account is doing just fine right now. It's okay to have multiple accounts. I have 2 529 plans for each of my kids.

@anhnguyen8422 3 жыл бұрын

My son is 13 now. Is it too late to start a 529 plan?

@Brraddd 3 жыл бұрын

Yes

@TravisSickle 3 жыл бұрын

No, it's not too late.

@Rodrigo-jv6sl 6 ай бұрын

what if you put money into a 529 but your child and everyone else in your family including yourself do not want to attend college. Can you get your money back tax free?

@TravisSickle 5 ай бұрын

contributions yes, earnings, taxed plus penalty.

@DaSmoov54 10 ай бұрын

Can multiple people contribute to a 529 plan?

@TravisSickle 10 ай бұрын

yes, some of the 529 plans make it easy with deposit only links to those accounts.

@DaSmoov54 10 ай бұрын

@@TravisSickle thank you!!

@TravisSickle 10 ай бұрын

🤑@@DaSmoov54

@Arnsteel634 5 жыл бұрын

What kind of twisted system have we created when u have to save for education like u r trying to save for retirement. Which I don’t understand either.

@jonpennline6268 5 жыл бұрын

A system where we allowed the government to guarantee all student loans, therefore causing a massive increase in tuition. Kinda like we did for healthcare.

@rayg5445 4 жыл бұрын

If the gov stopped giving free money you would watch all universities crumble and their prices would go down to an acceptable market price. No more paying their sports coaches millions.

@professorjack2099 3 жыл бұрын

Something about your voice reminds me of drake

@TravisSickle 3 жыл бұрын

Haha 🤣

@milanimorales2645 Ай бұрын

I hope I can use it to put my kids in private school. 😬

@TravisSickle Ай бұрын

answered.

@user-bu3vf2wv7h 4 жыл бұрын

I love my niece and nephew but not that much 😂

@minnesotajack1 2 жыл бұрын

In all seriousness, I’m considering just having my kids take out student loans because at some point they’ll be forgiven across the board. It comes up every few years.

@TravisSickle 2 жыл бұрын

And that's the problem. Current student loan holders are thinking the same way and many are not paying in hopes of forgiveness.