Posts Taged 529-plan

Back to School: Balancing Educational Savings for Multiple Children

Back to school season is a whirlwind of activity for students and their families. Whether you’ve got elementary-aged children or high schoolers looking ahead to the next step, you’ve probably already considered options for funding the college days to come.

For families with multiple children, this probably means multiple college funds – and that may be a daunting prospect. But with some thoughtful planning, you might find that balancing educational savings for multiple children is more attainable than it seems.

And parents aren’t the only ones who might consider college savings plans. Grandparents who want to contribute to their grandchildren’s educational future certainly need to consider how balancing educational savings for multiple students will impact their financial plans.

Below are some tips that can help you prepare for your children’ or grandchildren’s college savings needs.

Make a Plan

Before you know how much to save for your students’ future educational needs, you need to know what you’d ideally like to set aside for them. Are you prepared to pay full tuition to any school of their choosing?

Saving for college looks different for every family and the most important plan is one that works for your budget. If you want to contribute enough to pay partial tuition at a state college, you will need to set aside less money than if you plan to bankroll every cent of a private four-year education.

Planning for multiple college savings funds doesn’t preclude a generous financial contribution to each of your children’ or grandchildren’s college educations. However, you may need to be prepared to contribute more money at a greater frequency to achieve the savings you desire.

Commit to Saving

Once you know what you want to save, you need to put your plan into action. There are various savings options for parents and grandparents to use when putting funds aside for their students’ future, including the popular 529 Plan. Your financial advisor can help you to determine which plans might be a good fit for your family.

It may be tempting to put your students’ college savings plans to the back burner to be dealt with after you handle regular expenditures and higher priority investments. But if you do that for too long, you’ll begin to fall short of your savings goals.

One of the easiest ways to prioritize college savings is to automate deposits toward your college savings funds. Your financial advisor can help you calculate the amount you need to set aside each month in order to reach your savings goals.

Encourage Academic Success

As your children or grandchildren get closer to college age, their academics will make a greater impact on the amount of family funding they’ll need to get through school. If your students are able to earn scholarships or grants toward their college educations, your piece of the financial puzzle gets smaller.

Encourage your students to pursue academic success by working toward good grades and a high GPA. Help them to study for standardized tests, like the SAT and ACT. Each of these factors will make a difference when it comes time to fill out college applications.

There are, of course, many individual factors to consider when it comes to balancing educational savings for multiple children. If you’re looking at your educational funding options, your CERTIFIED FINANCIAL PLANNER™ can help. Contact Jake Sturgill today for a consultation today!

    Prior to investing in a 529 plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax tree. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. 

    Tips for Utilizing Your Grad’s 529 Plan

    Graduation season is upon us and if you’ve got a newly minted (or soon-to-be minted) high school grad, you’re probably already thinking through this summer’s pre-college plans. With a fresh diploma in your grad’s hand and acceptance letters sign and sent, you’ve likely got a few questions about how the financial aspect of this new chapter is going to play out.

    If you’ve saved for your child’s higher education through a 529 plan, it’s time to look into how to make the use of this money for your student’s college needs. Here are some ways to put grad’s 529 plan to good use.

    Reserve 529 Plan Withdrawals for Higher Education Expenses

    Qualified higher education expenses are the only ones for which you can use your student’s 529 plan withdrawals. These include many expenses through your student’s college or university, such as tuition, room and board, meal plans, and textbooks. Other school-related expenses, like tech for your grad to keep up with their studies, can qualify.

    Expenses like travel to and from campus or dorm decor are not considered qualified expenses by the IRS and can incur a higher tax rate on your 529 withdrawals. In general, it’s best to stick with IRS recommendations for spending your 529 funds and consult your financial advisor with specific questions.

    Encourage Your Grad to Keep Relevant Receipts

    Since you’re probably not living on campus with your grad and may have a few hundred or thousand miles separating you from your student’s new address, it’s important that your college student is on the same page as you when it comes to allocating education expenses. Clue your student into the expenses that they can count under their 529 plan withdrawals and encourage them to keep relevant receipts for these expenses. With these in hand, your tax time records will be much easier to maintain.

    Mind Your Dates

    When taking withdrawals from your 529 plan, it’s important to keep your related expenses within the same tax year. If you take money out with plans to pay a future bill, you run the risk of overdrawing your account if you don’t make payments until the following tax year. Plan accordingly when scheduling your bill payments to avoid running into problems with next year’s withdrawals.

    Consider Future Contributions

    Just because your student is soon to start their college career, you don’t need to stop contributing to their 529 plan. In fact, some parents find that they can increase their college contributions after their student starts school since their household budgetary needs are lower with one less family member living at home.

    Additionally, since many parents plan for their 529 plan around ballpark figures, some families prefer to add additional funds once they have specific figures based around their children’s actual higher education needs. Talk with your financial advisor to get the best idea of whether your 529 savings are enough to cover your student’s expenses.

    If you’re looking to make the most of your existing 529 plan or are still a few years away from your children’s graduations and want to start saving, contact Puckett & Sturgill Financial Group to meet CERTIFIED FINANCIAL PLANNER™ Jacob Sturgill. Jake will help you work through your family’s higher education funding needs.

      Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

      Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings.

      What to Ask Before the College Tour

      Aaron Puckett, MBA, CFP®

      Recently, one of my clients said, “You can only be as happy as your least happy child.” While I’m not certain that I completely agree, the point that she was making certainly hits home. For those of us with children, our hearts are bound to them and we desire very strongly for their happiness and well-being. When your child enters their junior year of high school, and you begin the journey of selecting a college or university for them to attend, don’t underestimate the influence of your heart. Why? Because no matter how much you’ve planned ahead and saved in a 529 college plan or elsewhere, at the end of the day your desire for your child to be happy will often undermine your ability to select the college that offers the most value for them over the long-term.

      Read More