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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 4167
Experience:  Providing Financial, Tax & Business advice since 1986
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This is more of a "financial" parenting question..Ive a 7

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This is more of a "financial" parenting question..I've a 7 month old. Any recommendations on a good 529 Plan? I'm in CA. Also, the money you put aside in a 529..can that be used for qualified expenses before college i.e, private school expenses etc. before the child reaches college age?
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

Lane :

Hi, CA has it's own 529 plan ... you can see that here: https://www.scholarshare.com/&gclid=CIG2sofygroCFQFk7AodQ0wADA

Lane :

And on your second question, sorry but no, only "Qualified education expenses can be pulled without the penalties on earnings

Lane :

Here's the IRS guidance on this: http://www.irs.gov/publications/p970/ch08.html

Lane :

From there, they say the following:

Lane :

Qualified education expenses. These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time. See Half-time student , later.




  1. The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution.




    1. Tuition and fees.




    2. Books, supplies, and equipment.






  2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution.




  3. Expenses for room and board must be incurred by students who are enrolled at least half-time. The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts.




    1. The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.




    2. The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.






You will need to contact the eligible educational institution for qualified room and board costs.

Lane :

Finally, if you want to look at another type of account for providing for education that DOES allow for withdrawal PRIOR to college you may want to consider a UGMA/UTMA account:

Lane :

From there (again this regards XXXXX XXXXX NOT 529 plans):

Lane :

Withdrawal Rules:


A withdrawal can be initiated by the custodian for the benefit of the child, as long as the expenses are for legitimate needs. Withdrawals are not limited to college costs, and can be used for pre-college educational expenses.


 


Treatment of Unused Funds:


Any unused money must be distributed to the child by the time they reach the age of majority or the maximum age allowed for custodial accounts in their state. For classic UGMA accounts, this is generally age 18. For the newer UTMA accounts, this is usually age 21, but may be as late as age 25.


Unlike Section 529 plans and Coverdell ESA’s, there’s no ability to transfer the account to another child or change beneficiaries.

Lane :

Hope this helps

Lane :

Finally, you can look at other state's plans as well ... Some states provide a STATE income tax deduction or contributions to their plan .. but CA does not See This: http://www.finaid.org/savings/state529deductions.phtml

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 4167
Experience: Providing Financial, Tax & Business advice since 1986
Lane and 2 other Finance Specialists are ready to help you
Expert:  Lane replied 1 year ago.
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Expert:  Lane replied 1 year ago.


Thanks much.

Good luck with everything.


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.

 

OR you can also add me as your preferred expert on your home page if you'd like.

 

Regardless, thanks again for the feedback!

 

Lane

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