What to Expect When You're Investing
Learn more about how a 529 plan works and what it has to offer
Not All 529 Plans Are Created Equal
Yes, all 529 plans offer the same federal tax benefits, but they will be different when it comes to cost, investment options, ability for friends and family to contribute, web accessibility, and more. While you should check your home state's 529 plan first, feel free to shop around until you find the right combination for your needs.
529 Plan Accounts Are Not Free
As with all good things, 529 plans come with a cost. The good news is that costs are typically low. They can be charged as a flat annual account fee, a percentage charge based on the amount of money you have in the account, or a combination of both. The costs are taken right out of the 529 plan's assets or your account balance, so you don't need to worry about ever seeing an extra bill. You can find each 529 plan's fees by checking their website. While cost should be part of your decision, keep in mind that you're paying for things like investment expertise, customer service experience, security of your personal information, and more.
You Don't Have to Save on Your Own
529 plans don't require all contributions to come from the account owner. That means that anyone can help add money to your account. All 529 plans administered by Ascensus have two ways to help:
- Ugift® makes it easy for friends and family to give gifts of college savings directly into a 529 plan account.
- Upromise® lets savers earn cash back for college on everyday purchases and automatically transfer it into a 529 plan account.1
You'll Need to Make an Investment Decision
If you are investing without the help of a financial advisor, here are some things to keep in mind.
Choice
529 plans can't give you investment advice. Instead, they do a great job of structuring and limiting the number of investment options so that you don't get hung up on not knowing what to pick. Most 529 plans will offer a combination of stand-alone portfolios, for savers to mix and match on their own, as well as a more simple approach, called age-based. With age-based, the 529 plan will automatically move your money from more aggressive investments to more conservative investments as the college years get closer.
Risk
529 plan investment options typically range from conservative to aggressive. On the conservative end, the goal is to limit the risk to your money, but still make a return on it. On the aggressive end, the goal is to make a bigger return on your money, but with more exposure to risk. No matter your risk tolerance, remember that when you invest in a 529 plan you are purchasing municipal securities, the value of which will vary with market conditions. Investment returns are not guaranteed and you could lose money by investing in a 529 plan.
Starting a 529 Plan Account Is Simple
Once you find a 529 plan you like, it's easy to set up your account.
All you need is 15 minutes
You can open your account online or with a paper form in about 15 minutes. Most 529 plans break up the process to make it easy for you to follow.
It's all about you, and your future student
As the saver, you'll need to provide your address, your birthday, and your social security number. You'll also need to enter the birthday and social security number for your future student.
You don't need much cash to start
Most 529 plans require the saver to put money into the account when they open it. Depending on the 529 plan, this could be as little as $25, and can be contributed online through a bank transfer, by mail with a check, or even through work using automatic payroll direct deposits.
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