How do advisors get paid on 529 plans?
Families who purchase a 529 plan through a financial advisor often pay a sales charge in addition to the plan’s underlying mutual fund fees. The amount of commission an advisor earns depends on the mutual fund share class selected within the 529 plan.
Do I need an advisor to open a 529?
The federal tax rules are the same regardless of which 529 plan you choose. You won’t need a financial advisor for your 529 plan if you are comfortable making investment decisions on your own. (And most financial advisors won’t want to sell you a 529 plan if that is all you’re asking them to do.
What is advisor-sold 529?
Advisor-sold 529 plans are only available through licensed financial advisors who work for a broker-dealer or registered investment advisor. A financial advisor may help a family select and open a 529 plan, create a college savings investment strategy and offer guidance when it is time to pay for college.
Can a financial advisor manage a 529?
The primary reason: 529 plans purchased through a broker, aka financial advisor, generally are more expensive than their direct-sold counterparts. And you might not only have to pay a hefty sales charge, but annual costs in advisor-sold 529 plans are typically higher as well.
What is the penalty for taking money out of 529?
There is no penalty for leaving leftover funds in a 529 plan after a student graduates or leaves college. However, the earnings portion of a non-qualified 529 plan distribution is subject to income tax and a 10% penalty.
Can I open a 529 for my spouse?
Yes. Since only one account owner can be named per account, family members may choose to open their own account for the same beneficiary. Be aware that a 529 plan’s impact on financial aid calculations can vary depending on the relationship of the account owner to the student beneficiary.
Who is in charge of a 529 plan?
Generally, the same person who contributed the money controls the Section 529 account. This doesn’t have to be the case, however. Someone else, such as a grandparent, could make a donation but name the child’s parent as the account owner, or a parent could establish the account and allow others to contribute to it.
What if your family saves money in the 529 plan and then you decide not to attend college?
The simple answer is: No, you won’t lose your money. The funds in a 529 plan can be used in a number of other ways if your beneficiary decides not to pursue higher education.
What if your family saves money in the plan and then you decide not to attend college?
If you have a 529 college savings plan and your child is not planning to attend college, don’t panic! In most cases, withdrawals from a 529 plan that are not for qualified educational expenses are subject to a 10% penalty and taxes on earnings.