REAL PEOPLE ASKING QUESTIONS

Q. Who else is scared AF about paying your kids’ tuition?

A. "Yep! College tuition rates have been increasing by almost 6% year after year, and this pace is not likely to slow down anytime soon. While the increasing costs can be daunting, preparing and saving early is the best way to calm your nerves. Even $25 per month contributed over your child’s first 18 years can make a huge difference. "

Q. Is 529 only for higher education like college and graduate school?

A. "Right on! While some parents rely on financial aid and scholarships, at the end of the day many families end up paying for their children’s education by dipping into their retirement savings, selling their assets, or taking out the expensive student loans. As a result, student debt in the US has reached a historic level of $1.5 trillion! "

"The best way to secure a future for your children is to start saving early via a tax-efficient savings account called a 529 plan that is federal tax exempt. Starting early and saving a little every month will set you up for success and protect you from making devastating financial decisions."

Q. Is 529 only for higher education like college and graduate school?

A. "We have a good news! Based on the recent Federal Tax Reform, 529 plans can now be used for K-12 educational expenses up to $10,000 per year. In addition to tuition, the assets of 529 college saving plans can be used for many educational expenses like housing, books, computers, private schools, and even trade schools."

Q. How do I open a 529 college fund?

A. "The easiest way to open your college savings plan is to use the U-Nest mobile app. We make sure that the process is seamless for you and completely paperless, so you can easily monitor your accounts on the go. It only takes 5 minutes to open an account and get peace of mind about your child’s future."

Q. Can funds in a 529 be used to buy a car?

A. "Funds in a 529 plan can be applied to a variety of educational expenses including housing, books, and computers; however a car is not one of them. Please remember that if you use 529 funds for nonqualified expenses, you will forego your tax benefits and will be subject to a 10% penalty on the earnings that have accumulated in your account."

Q. If we live in Los Angeles, is it recommended to sign up in California or does another state have better benefits?

A. "You don’t have to be a resident of a particular state to invest in its 529 plan, and the program with the best benefits is not necessarily the program of your home state. For example, CA does not provide state benefits to its residents. Other states offer additional state tax breaks, but often times those tax benefits are offset by higher fees. The important thing to know is that all 529 college savings accounts are exempt from federal taxation and proceeds can be used toward education in any state or abroad."

Q. Can funds in a 529 be used to buy a car?

A. "Funds in a 529 plan can be applied to a variety of educational expenses including housing, books, and computers; however a car is not one of them. Please remember that if you use 529 funds for nonqualified expenses, you will forego your tax benefits and will be subject to a 10% penalty on the earnings that have accumulated in your account."

Q. Why is college saving more important than retirement?

A. "While saving for retirement should be one of the most important goals for any person, the time your child goes to college will likely arrive sooner than your retirement. In addition, while many parents have an opportunity to save for retirement through their employer-matching 401(k) plans, many employers don’t match contributions into individual’s 529 plan. Lastly, you can always decide to work longer if you feel that you haven’t saved enough for your retirement; however the time of your child’s college enrollment is not flexible. In fact, 80% of parents said they would postpone their retirement by two years if it helps their children avoid student loans. (2007 online poll by Savingforcollege.com)"

This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.