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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12177
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I want to set up a college savings account for my son. I live

Resolved Question:

I want to set up a college savings account for my son. I live in California. What do I need to consider? There are options to choose from for plans, and there are options to choose from for institutions with which to open the account (eg. Fidelity vs. Wells Fargo).
Submitted: 8 months ago.
Category: Finance
Expert:  Megan C replied 8 months ago.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com

Megan C :

How are you today?

Customer:

hi i am well - thanks!

Megan C :

Are you looking to open up a 529 plan?

Customer:

yes i think so

Megan C :

Okay so how that works is you place money into the account. You don't get a tax deduction on those funds, but when you take money out you are not taxed on the gains

Megan C :

the idea is to start when the children are young, and then allow the investment to grow so that you have lots of tax free gains

Megan C :

Basically your investment options are the same as they would be for any brokerage account

Megan C :

You can invest in the stock market, bonds, etc

Megan C :

You could open the account at any brokerage firm...like you mentioned Fidelity, Wells Fargo, Charles Schwab, etc

Megan C :

Is there anything in particular you would like to know?

Customer:

does the brokerage firm make a difference? or do they all offer the same plans?

Megan C :

Well all the plans will be similar, although different managers will manage the funds so their portfolio could vary slightly

Customer:

ok

Megan C :

You can have a plan that's invested only in one mutual fund, if you wanted

Customer:

and i heard something once about different plans by state -

Customer:

is the state something to consider?

Customer:

https://www.wellsfargo.com/investing/education/529 - Suit Payments to your Budget: Access to over 30 plans offered, Wells Fargo Advisors makes saving for college easier with low minimum contribution options available to meet your college savings goals.

Megan C :

Yes your state will have different options

Customer:

If they have over 30 plans how do i decide which plan?

Megan C :

Well, you will have to get a breakdown of each and then choose one that fits your risk profile

Customer:

my kid is 2 and i'm having another in March so ready to start early :) Just want to make sure that i'm asking the right questions when i go into the Wells Fargo near me.

Megan C :

Do you want low risk investments that get lower returns, or high risk investments that could have high returns (or losses)

Customer:

well i imagine like my 401k since they are young start higher risk and gradually make lower risk as they approach college age?

Megan C :

You can do that

Megan C :

That's called an aged-based option

Customer:

should i definitely do this in my state? or is it better to have a family member open in a different state?

Megan C :

I would just do it in your state. It won't make that big of a difference

Customer:

ok cool

Customer:

so then the different "plans" mentioned on the WF site are likely referring to different investment plans (eg. age based, risk level, etc)???

Megan C :

Yes. You'd have to go over all of this with the Wells Fargo personnel

Megan C :

Is there anything else you need assistance with today?

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12177
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 3 other Finance Specialists are ready to help you
Expert:  Megan C replied 8 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Expert:  Megan C replied 8 months ago.
Cassie,

I see we were having difficulties in chat. If you have further questions, please reply below. If not, please rate as "excellent" so that I may receive credit for assisting you today.

Thanks again, and congrats on the new baby!

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