choosing a 529 college plan to invest in for your children or family

My latest challenge recently was choosing the best (or one of the best) 529 plans for my son, Elek who is currently 3 years old. I had been putting this off for quite some time because it is very overwhelming. There are more choices than there are states and the ones you would be interested in greatly depend on which state you live in. Some 529s don’t allow you to participate unless you live in the state in which it is offered. Others allow anyone to participate. Some 529 plans that are offered allow you a state income tax deduction up to a certain amount.

Let’s briefly go through most of the advantages and disadvantages of 529s, which you’ll need to know.

Advantages Disadvantages
State income tax deductions (also tax deferred/exempt growth) You are limited to the investment options within the plan
The owner of the account maintains control of the 529 Money withdrawn from the account not used on college expenses is subject to a 10% federal tax, earnings will be taxed as regular income, and possibly past state tax deductions
Low minimum startup requirements and contribution requirements A 529 may affect the beneficiary’s ability to receive grants or scholarships (A workaround to this is if the owner of the account is the grandparent.)
A 529 account can be an easy “automatic” approach to saving for college
Anyone can open a 529 for anyone else (Also anyone can contribute)
These plans are relatively low cost
The plans are very flexible (you can choose to move your 529 to another plan)
The total amount in the account can be substantial (over $300,000 in some plans)

Now we get down to business. Let’s start with the state you’re in. I, for example, am in Tennessee which has no state income tax (offset by their massive sales tax). This means that there’s no financial reason for me to limit my choice to my state. On the other hand, if you live in a state like Ohio, there’s no reason to go outside of your state since you can deduct up to $2,000 per beneficiary, per calendar year off your state income. If you’re lucky enough to live in a state that allows deductions for contributing to a 529 plan, then that greatly narrows your choices. The choice was not so easy for me since this was not a factor in my decision.

I started my research of 529 plans with people that I knew had used a 529 or something similar. My dad used the Tennessee BEST program for me when I went to college. My wife’s boss currently uses a 529 plan from the state of Kansas. I thought that those look OK, but how do they compare with the other states’ offerings? Which one is truly the best for my son? Well to answer those questions I turned to everybody’s pal Google as usual hoping to find a list comparing the multiplicity of available plans.

I relied heavily on four of the best sites that I (or rather Google) found and I weighted them in the following order:

  1. Morningstar’s “The Best and Worst 529 College-Savings Plans”
  2. Consumer Report’s “Some of the best and worst 529 plans”
  3. “Kiplinger Top Plans”
  4. MSN’s “The 5 best college-savings plans”

Essentially I cross referenced the plans on all of these sites hoping to find one that was on all of them. I thought it was odd at the time, but not many were listed on multiple sites. In retrospect, this fact leads me to believe that there is no really “best” 529 plan, but rather each individual needs to choose a plan based on his/her needs. This can be annoying because it adds to the work on the part of the individual looking for the best 529 plan. That being said, I came up with a list of about six 529’s that the articles indicated were the best. I made sure to avoid all of the schools listed in the “worst” category of any of the listed sites. Below is a listing of the best/worst and the ones I narrowed down using my own opinion/needs.

Best Worst Narrowed
Alaska 2* Alaska
Nevada Nevada
Nebraska 2* Nebraska
Ohio (Ohio Tuition Trust Authority) Ohio (Putnam CollegeAdvantage) Ohio (Ohio Tuition Trust Authority)
Virginia 2* Wisconsin Virginia
Indiana Arkansas Indiana
Utah New Jersey
Rhode Island New York
Michigan Montana
Georgia
Iowa
Illinois
Mississippi
Colorado Colorado

* Number of times the plan appeared

Now that I had narrowed my candidates significantly I decided that cost of the plan would be the next deciding factor. You can find the costs per state at collegeanswer.com.

collegeThis is finally how I arrived at my final answer, which was Ohio (Ohio Tuition Trust Authority). Another benefit to this particular plan is that you can get a $25 referral for both you and the person referring you when you sign up and enter their referral code (mine is 2524394). I believe this only goes on until Dec. 15th, 2009 at which point they may cancel the referral program or they may extend it. There’s also another benefit to this plan where you can earn $25 for just setting up recurring monthly electronic fund transfers or payroll deductions for at least 90 days. You can read more about both of these programs at collegeadvantage.com. I’m sure other states’ plans have similar referral programs, though I haven’t seen them.

Those interested in receiving the $25 referral for signing up for this 529 account, follow the steps below:

  1. Enroll online
  2. During the enrollment process it will ask you for a referral code. Enter 2524394.
  3. After you complete your account enrollment, 7-10 business days later you will receive a $25 credit in your 529 account. (I will get a $25 credit as well.)
  4. Also don’t forget to set up your recurring monthly electronic fund transfers or payroll deductions to receive another $25 after 90 days.

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videos of our gulf shores, al beach trip

Enjoy these videos from our Gulf Shores vacation.

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week long family vacation to gulf shores, alabama

IMG_1966Last week (9/12/09-9/19/09) Annabeth, my family, and I all went on vacation to Gulf Shores, AL. We rented a beach house that I used to stay in with my family as a child that was fabulous. The house is owned by Bob Wheat and there are pictures on his website. We stayed in the 4 bedroom Gulf Beach house. The week long forecast was saying that there was a large chance it would rain the entire time we were there (like it did in Memphis), but we really lucked out. The rain came and went maybe 2 days and for only a brief amount of time.

IMG_2032We made peanut butter and jelly sandwiches for the road and left Memphis Friday after work at about 6PM. We cruised into Jackson, MS after about three hours on the road. My mom’s sister Nancy was nice enough to put us up for the night. It was great to see her and her wonderful new treasures she found at an estate sale. There were two copper giraffes about three feet tall painted in intricate designs that she got for $20! The copper alone is worth much more than that.

IMG_1994The next morning we were on our way again at about 9AM or so. We managed to make it to the beach around 4PM. While Diana and Elek got to play on the beach in the (what we thought was going to be rare) sun, my mom and I went to the grocery store to buy food for the week. Keep in mind it is MUCH cheaper to buy food and cook most of the time when you go to the beach. To give you a little shock comparison, a handle of Captain Morgan Spiced Rum in Memphis is around $22, but on the beach it’s about $56. Yeah, expensive. I also noticed that happy hour was earlier on average. The one sign I saw for happy hour said from 2 to 5PM.

IMG_2043Saturday night we made hamburgers and baked beans. I brought a small Webber grill that was surprisingly efficient, though we forgot the charcoal chimney, which is the best grilling invention ever. I used Kingston Matchlight and it worked like a champ. The grilling surface on this grill was pretty large and the coals were so close, it took less coals to cook than a larger grill. This was good considering to add more coals would have been a total pain. This is the point the relaxing officially began.

IMG_2311Elek was allowed to stay up much later than usual of course, though this didn’t affect his uncanny ability to wake up at 6AM on the dot. Usually we would put on a show for him and go back to bed for about 45 minutes. Sunday it was overcast for about half the day and sunny for the other part. It shifted back and forth so that the weather determined our beach visits. The best thing about this house and the beach in front of it was that it wasn’t crowded at all and we had the nicest and what appeared to be the largest amount of beach in front of our house.

IMG_2148Over the next several days we went for walks on the beach finding interesting things like abandoned houses with no stairs leading up to them and a rather large boat that appeared to have been burned. The sunsets were beautiful and the night beach walks were a lot of fun as well.

We spent a lot of time playing RummyKub, which was a lot of fun. It turns out Annabeth is a master at this game so if you ever want a swift whooping, ask her to play. Another game we all got into we learned from my mother. I’m not sure what the specific game is called, but it’s solitaire with two decks of cards. You line the 4 kings from each deck vertically, then you deal out 12 stacks of cards between them. It took a little while for it to catch on, but once it did we couldn’t stop playing it.

jacksonMy cousin Mary came to visit us for a day with her son Jackson. My mom, Mary, Jackson, and I went crabbing with no success. It happened to be during the hottest part of the day. Needless to say, that’s not a great idea. We all also sang and the two boys danced while Annabeth played her guitar. I’m glad she brought it. Elek absolutely loved it and was fascinated with the guitar. I’m pretty sure his favorite song was “Pop Goes the Weasel”. Luckily I got some video of him singing and dancing to it.

bdaycakeTuesday was my birthday (Sept. 15). What better way to spend your birthday than on the beach!? I hadn’t really thought about it before, but it was great! Diana baked me a cake (pictured) and Annabeth helped her do the icing. My mom also made a baked oyster dish that was the best I’ve ever had. Speaking of, I need to get that recipe! Elek was very excited about the cake and ice cream. We deemed him a cakehead since he acts like a fiend whenever there is some around. I got some really cool thin ties and button up shirts from my mom and the cards I received were hilarious! Diana is taking me to Nashville Oct 2-4 to see Snow Patrol for my birthday present. I can’t wait!

karyWednesday night the girls (Annabeth and Diana) went out to Karaoke at the Pink Pony Pub. They had a really good time. I stayed in, relaxed and watched a few minutes of TV. The next night we went out to eat at a local place that was pretty good and not too expensive. My mom and her friend Linda that came down to visit for a couple of nights took Elek back to the beach house and Diana, Annabeth, and I went out. We first drove to the infamous bar Flora-Bama, but since they were charging $5 a person on an off season Thursday night we headed to the Pink Pony Pub. We sat on the beach a while and then the girls got up to do a couple songs. We danced a bit before heading back to the beach house.

IMG_2228Annabeth, Elek, and my mom all fed the seagulls chips and bread. It was a very weird site. I took several pictures and a video of it. There were tons of birds flocked together in a small area. I think Elek’s favorite part was scaring them off by running at them. Elek also managed to catch a sand crab one evening. He held it in his hands while I got a picture. I believe it was feigning death while in his hands. Jackson had caught one days before and Elek must have thought that was great.

IMG_2382The trip was a massive success and I would love do it again. This year it was very fortunate that we got to do it in the off season since it wasn’t crowded. I’m really glad that we came back on a Saturday so that we had time to get back on schedule.

If you’d like to see more pictures, you can see them on my facebook page.

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elek sings for the world to hear

I luckily got Elek on video singing a few songs. Please enjoy.

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Vacation to Beaufort, SC!

scI am currently on vacation in Beaufort, South Carolina so you won’t see many posts from me this week. I plan to take pictures and post them when I get back. I can’t wait to be there already. We’re driving 10 and a half or more hours each way with a toddler. We’ll see how this works out. Ciao!

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it’s friday

It’s friday and I’m in my cube looking at all the pictures I have of Elek and Diana up on my wall. They make me smile. There’s one of Diana and Elek having a great time on the carousel at Wolfchase mall. There’s another with Elek working on his Winnie the Pooh airplane, still another with Elek wearing his “I do all my own stunts” (he does) teeshirt looking up at momma in the kitchen of our old apartment. It’s just amazing how time flies. I’m very fortunate to have such a happy, functional, and wonderful family.

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