Anyone use this or have any suggestions on other options??? Looking for any and all info you can provide... Thanks!
College Savings Iowa
- Thread starter thisISnextyear
- Start date
I have two 529 plans for each of my boys from College Savings Iowa. I have been contributing monthly for 3 years and have just in the last couple of months since the upswing in the market seen my balance actually show a positive investment...but if you have several years until your kids will be in college, I would guess and hope that it will be a fairly safe and somewhat profitable way to save for college. Remember that with 529 plans the money has to be used for college expenses, so in other words if they don't go to college there is a substantial penalty to just withdraw the money. The money can be transferred from one child to another though at no cost.
It also doesn't hurt to use Upromise to add a little to the 529 balance (I've gotten about $50 a yr from using it).
I'm just beginning to get through all the details but the tax benefits are the biggest benefit...
It's a pretty blah plan, target funds and index funds, fairly high expense ratios for what you get (but hey, the state is making a profit on the plan). The state tax deductibility really does not mean much unless you are in the 35/38% tax bracket. Look for some muni zeros (you own/keep the $$$, tax advantaged) or another states 529 that has a better offering of investment choices. If you aren't interested in looking for something better the Iowa plan is better than nothing, but it's a close race. I don't like the states profiting form this plan.
I've been sticking money in for about 6 years now. The state website https://collegesavingsiowa.s.upromise.com/ does a good job of explaining most anything. Once you get everything set up, the website is very easy to use.
Basically you don't pay an tax on your capital gain if it's used for education expenses. They use all Vanguard funds ,so expense ratios are extremely low. A few years ago they were rated in the top 3 for plans offered by all the states. You can invest aggressively in stocks or go with a fixed interest plan, or even go with a target date fund. I don't think there's a better game in town than this one from an expense standpoint.
Returns were looking really good up until the fall of 2008.....Gotta think long term, but also that your time horizon is 18 years for a child.
Basically you don't pay an tax on your capital gain if it's used for education expenses. They use all Vanguard funds ,so expense ratios are extremely low. A few years ago they were rated in the top 3 for plans offered by all the states. You can invest aggressively in stocks or go with a fixed interest plan, or even go with a target date fund. I don't think there's a better game in town than this one from an expense standpoint.
Returns were looking really good up until the fall of 2008.....Gotta think long term, but also that your time horizon is 18 years for a child.
You just totally contradicted the previous poster. I know nothing about this kind of thing so can someone post some actual numbers to back up their statements? Specifically the expense statement.
The Iowa 529's are awesome. Some of the best in the country. Your money is invested with Vanguard mutual funds and they have the cheapest fees in the industry. The state of Iowa doesn't make jack squat off these plans. I'd recommend investing in the plans which automatically adjust your investments more conservatively as your kids grow up. They give you a choice of how aggressive you want to be, A, B, C or D. The money is invested in a pool of Vanguard mutual funds which means your money is invested in thousands of different stocks and bonds. Choose what path makes you sleep best at night, leave it on autopilot, invest a little each month, and leave it alone. You will be happy with it in 18 years. Invest through the web site instead of through a broker/financial planner. Otherwise you'll be paying fees to the broker/financial planner which you don't need to do. Do it all on the web site, it's as easy as opening a checking account.
https://personal.vanguard.com/us/whatweoffer/college/finda529?Link=facet
This link to Vanguard's site may help answer some questions.
This link to Vanguard's site may help answer some questions.
You don't have to use the funds for an Iowa school. You can use them nationwide. If your kid gets a full scholarship you can transfer the funds to your other children or save it and transfer to your grandchildren down the road.
But, if you cash out and don't use it for college expenses you will get hit with a penalty. I wouldn't worry too much about that though. You could take out $2K for example, buy a laptop and say it's for school.
But, if you cash out and don't use it for college expenses you will get hit with a penalty. I wouldn't worry too much about that though. You could take out $2K for example, buy a laptop and say it's for school.
I do Savings Track C for my kids and my returns have been:
1 yr - +20%
3 yr - -2.15%
5yr - -0.08%
Good this year, bad the last 5 years, just like the stock market because that is where most of it is invested, with Vanguard stock mutual funds.
If you don't want to do the age-based investing you can pick your own mutual funds so you could put all your money in bonds or example, or money market funds and stay out of stocks if that makes you nervous. Over an 18 year period though, I'd recommend 50% stocks 50% bonds for at least the first 10 years, then move more and more over to short-term bonds and money markets. As stated before, the age-based system does this all for you automatically which is really nice.
1 yr - +20%
3 yr - -2.15%
5yr - -0.08%
Good this year, bad the last 5 years, just like the stock market because that is where most of it is invested, with Vanguard stock mutual funds.
If you don't want to do the age-based investing you can pick your own mutual funds so you could put all your money in bonds or example, or money market funds and stay out of stocks if that makes you nervous. Over an 18 year period though, I'd recommend 50% stocks 50% bonds for at least the first 10 years, then move more and more over to short-term bonds and money markets. As stated before, the age-based system does this all for you automatically which is really nice.
I dont have kids yet but I do remember Alabama having a similar plan starting in the early 90's. Now it is time to pay up the state has no money and many people got burned. Just saying that saving for a child's education is very very honorable but this type of investment could leave a parent with nothing at year 18. Of course I am sure people who invest in this plan are well aware of that.
It really has nothing to do with how well the state is doing. It is like having a your own savings account for college.
To be clear, if your kid gets a scholarship, you can cash out of the 529 the value of the scholarship and the only "penalty" is having to pay income tax on the gain.
Scholarships and 529 Plans - Kiplinger.com
You are better off trying to find an educational expense to spend it on so you don't have to pay that tax, but there isn't a 10% penalty like there is if you withdraw for an unapproved reason.
