Yes, you guessed it, one is extinct and the other is on the endangered species list. 529 plans were introduced to the American public as a way to save for future escalating college costs and named after Internal Revenue Code section 529 in 1996. 529 plans are operated at the state level and each state has their own personal signature or contract stipulating the varying rules and regulations of each plan.

There are 2 types of 529 plans: a prepaid plan and a savings plan. The savings plan works much like a 401K and IRA and the funds being invested in securities. This means the performance will move up or down depending upon the financial product selected. Prepaid Plans allow someone to prepay the full college credit amount or a partial amount based on today’s rates.

Sounds like we should all run out to the nearest 529 plan manager or financial advisor and fund as many as we can afford, especially since some states allow up to $300,000 per beneficiary and there are no income limitations and/or age restrictions. Furthermore, accumulation and distribution are both federally tax-free as long as the funds are used on education expenses.

SCCRREEECH!!! That’s the sounds of brakes being heard all around the country. Why? States are facing severe funding shortfalls and worse yet, some states are projected to run out of money by 2017. There are only 5 states that promise to cover any shortfalls if the funds cannot meet the obligations. 5 states are currently closed to new enrollment and one state plan is being wound down. 529 plans may not be extinct but without a serious injection from state legislation (raising the price of the plans by as much as 15%), and/or imposing additional fees, plans are heading the way of the dinosaur.

At LifePro we’ve been offering 529 Rescue Plans for sometime. We’ve been teaching our producers how to give their clients the same ability to grow sizeable amounts of money for the use of college on a tax deferred basis with the same ability to access the compounded funds on a tax free basis. Our plans don’t stop there though. As an additional college benefit, the funds are placed inside and the interest is NOT factored into the individual’s assets when applying for financial aid. The money is not mandated to be used on education. The money is the individual’s and available to be accessed even if the client or the client’s immediate family do not chose to use it for college. To find out more about this amazing 529 rescue plan please contact us at LifePro and we’ll give you the details: 888-543-3776.