Disadvantages of a 529 Plan
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- Опубліковано 25 чер 2024
- The reasons why you should use a 529 plan are many, but there is always a downside. In my previous video we talked about all the benefits to investing in these tax-advantaged accounts. Now, let me share some the disadvantages of a 529 plan to help you reach a final decision!
0:00 Introduction
1:17 Counts Against You When Doing FAFSA Application
1:45 10% Penalty and Income Tax on that 529 Plan
2:38 Not All 529 Plans are Good
3:09 Not All States Offer Tax Deductibility
3:36 Investment Options
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DISCLAIMER: THIS VIDEO IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS TAX, FINANCIAL, OR LEGAL ADVICE. EVERY PERSON’S SITUATION IS DIFFERENT AND YOU SHOULD CONSULT WITH YOUR OWN FINANCIAL AND TAX ADVISOR FOR ADVICE SPECIFIC TO YOUR SITUATION. COMMENTS ARE NOT REVIEWED
ACap will not respond to comments seeking tax or financial advice. Please consult a CPA or CFP who is familiar with your individual circumstances.
Remember however. You can always take out your contributions tax free, no penalties. So if your kid doesn't go to school, you can at least get back your contributions.
Great point. Thank you for clarifying.
Basic ques...as i m at early stage....should i go for brokerage or state to open 529 account?
Hey Ara. How are you? Not asking for advice here, but interested in your thoughts on the relative merits of using Acorns instead of a 529. I saw high costs (%) on most of the 529 plans I saw.
Hi Ara. I'm going to post a video very soon about the differences between the Acorn Early and 529 plans accounts. There are tons of great low-cost 529 plans offered by various states.
Can I withdraw my contributions without penalty? Note: not my earnings, just my contributions.
Yes
Ok... we've been religiously investing in our 3 kids 529 plan monthly since they were born. They are now 9, 7, and 5... We live in California and I know we can't deduct the contributions but now I find out that my kids will be punished on the FAFSA application. What are the better options at this point and what can we do with the money already invested with Vangaurd 529 plans?
Thank you...
5% of student assets is punishment on FAFSA? Be practical and sensible.
@@ormand3000 Agreed! The differed taxes is well worth it. Thank you!
move out of California