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I believe that 529 savings plans are significantly overused and do not deliver the intended results. There are many investment strategies that can be used to help pay for college, why limit yourself to the one most heavily marketed.
Investments to Defer Income
- Coverdell Education Savings Account
- Qualified Tuition Plan (529 Plan)
- I Bond/EE Bond
- Traditional IRA, Roth IRA, or SIMPLE IRA
- Annuity or Life Insurance
- Tax-Efficient Funds
529 Plan are Not Right for Everyone
- 529 Plans must be reauthorized in 2009
- May become a direct offset from financial aid.
- Returns in last five year are very low
- Reduces flexibility for parents retirement
Administrative costs are 50bp to 75 bp
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