Question 4: What if my child doesn’t go to college or gets a free-ride scholarship?
If the beneficiary of the ESA or 529 doesn’t use the money by age 30, you can change beneficiaries at any time and as often as you want. Siblings, parents, nieces, nephews pretty much anyone in the family is eligible.
If you decide to use the money for non-educational expenses, you’ll pay a 10% penalty plus income taxes on the distribution.
Good news… If your child’s expenses are covered by scholarships and you withdraw money for non-qualified purchases, the 10% penalty does not apply.
What’s your plan?
Question 3: How much control do I have?
Like a Roth IRA, you can invest in any mutual fund in any allocation you wish in your ESA. That’s what makes an ESA a better option than the 529 for most people.
You can also change funds as often as you want. Most 529 plans are limited to one fund family and restrict the number of investment strategy changes you can make each year.
Before investing into your kids or grandkids college, you need to be debt free (besides mortgage), three months of expenses saved up in your storehouse fund and finally putting 15% of your income away towards retirement. Don’t begin saving for your loved ones college until those steps just mentioned have been completed.
How much can I invest?
It is never to early. If you plan to open your college fund with $2,000 or less, go with an Education Savings Account (ESA).
You can contribute up to $2,000 per year per child in an ESA. If you want to save more, or if the child’s parents make more than $200,000 per year, a 529 has no annual contribution limit or income restrictions.
Continue to show the kids the importance of hardwork and being trusted with the little things. So later in life they will be trusted with the big things like paying for their college to chase a dream of being a doctor, lawyer or teacher. Not that college is for everyone, but it might be for your child.
Many parents believe they owe their children a full ride to college at all cost.
College is important, it does not rank above retirement or your Storehouse fund. And it is not a reason to go into debt.
Once you are debt free and have saved up three months of expenses in your Storehouse fund and your contributing 15% of your income to retirement, now let’s contribute to our kids or grandkids college fund. We recommend investing in good growth stock mutual funds and an Education Savings Account (ESA).
Question 1: How can I use the money?
Answer: Obviously, you’re opening this account to pay for educational expenses, but each plan defines that differently. ESAs allow you to use funds not just for education but also pay for off-campus housing, computers and other education related expenses with your ESA.
But eligible expenses for a 529 plan are limited to college tuition, room and board, school-required books and supplies.
Protect your money from uncle Sam. Even if you have plenty of cash. Utilize the tax free growth.
Don’t let your money pile up in one place. Like manure, if it piles up in one place it stinks. Spread your money around [diversify], like manure, it makes things grow.
I’ve been working under my pops for 6 years. That will end on 12/13/13.
My day job has been very beneficial. It has taught me how to do business as a government contractor. Serving customers from the FAA, Navy, NGB, Air Force Academy, Eglin AFB and others. As the firm’s Contracts Manager for 250 employees and multiple contracts, there was always a cost proposal to do or a bill to submit.
But after 12/13/13 my customers will be individuals, families, churches and businesses that want to seek counsel on having a plan to manage or steward income. That is my passion. Regardless if you’re a 5th generation millionaire or fighting to keep your house. I want to encourage and convince as many people as possible to be intentional with their income that we work so hard for so we can teach the generation we leave behind how to steward. The cycle continues each generation.
If we aim for nothing, we hit nothing.
Looking forward to this. A lot.
For more info. www.financialstorehouse.com
I’ve always respected the value of time management. But after witnessing the 2013 Iron Bowl, I have a new understanding on the value of :01.
Just one second can make a difference in our day, week, month or career.
The decision that was made just now can impact your revenue just like the decision Auburn made to prepare for a kick return if the Alabama field goal kicker kicked it short. The kick went short. Auburn returned it 108 yds for the win. Watch the fans reaction.
Auburn’s “bottom line” benefitted from the counsel of the coaching staff during the final :01.
Continue to work hard and expect the best but always have a plan for the worse case.