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College Savings Solutions from TIAA-CREF - YouTube
Channel: Designing Spaces
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THIS IS THE SHOW ALL
ABOUT YOU AND YOUR SPACE.
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YOUR HOME, LIFESTYLE AND HOW
THEY AFFECT YOUR KIDS.
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WE ARE KIDS SPACES.
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EARNING A
COLLEGE DEGREE IS STILL AN
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IMPORTANT PART OF THE AMERICAN
DREAM FOR MILLIONS OF FAMILIES.
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BUT COVERING THE COST CAN BE
CHALLENGING.
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INCREASINGLY, IT'S A FAMILY
AFFAIR.
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(MUSIC IN BACKGROUND)
KIDS
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SPACES GOT TOGETHER WITH REGINA
LEWIS, AUTHOR AND AN EXPERT ON
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PERSONAL FINANCE TRENDS.
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TO TALK ABOUT COLLEGE SAVING
OPTIONS.
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HELLO.
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AND THANKS FOR TAKING THE TIME
TO LEARN MORE ABOUT PAYING FOR
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COLLEGE.
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WE KNOW AND APPRECIATE, IT'S
BECAUSE YOU CARE ABOUT A YOUNG
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PERSON.
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A CHILD A GRANDCHILD, A
NEIGHBOR.
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MAYBE YOU'RE EVEN A STUDENT AND
YOU VALUE EDUCATION.
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HERE'S WHAT WE'RE ALSO GUESSING.
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YOU DON'T HAVE AN EXTRA $120,000
SITTING AROUND TO FULLY FUND A 4
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YEAR DEGREE.
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TRUST ME, I GET IT.
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BUT WE ARE GOING TO COVER A LOT
OF GROUND TODAY.
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TALKING THROUGH REAL LIFE
SCENARIOS WITH REAL OPTIONS YOU
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CAN APPLY TO YOUR OWN SITUATION.
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ACTIONABLE ADVICE IS THE GOAL.
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SO, LET'S JUMP RIGHT IN.
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LUKE, THANKS FOR JOINING US
TODAY.
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YOU'VE GOT A QUESTION TO START
US OFF.
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I HEAR ABOUT 529'S ALL THE TIME
BUT WHAT ARE THEY?
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IT'S A GREAT QUESTION.
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A 529 PLAN IS A TAX ADVANTAGE
EDUCATION SAVINGS PLAN OPERATED
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BY EACH STATE THAT ALLOWS FOR
FAMILIES TO SET ASIDE FUNDS FOR
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FUTURE COLLEGE COSTS.
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INCLUDING TUITION, A PORTION OF
ROOM AND BOARD, BOOKS, AND EVEN
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A COMPUTER.
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GENERALLY, THE STATE CHOOSES AN
INVESTMENT FIRM SUCH AS TIAA
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CRAFT TUITION FINANCING INC.
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TO MANAGE THE PLAN.
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WHICH IS A SIMILAR CONCEPT TO A
401K.
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ALMOST ANYONE CAN OPEN A 529
COLLEGE SAVINGS ACCOUNT AND SOME
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STATES ENHANCE THE TAX ADVANTAGE
ALLOWING YOU TO DEDUCT
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CONTRIBUTIONS UP TO A CERTAIN
LEVEL.
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ON YOUR STATE INCOME TAXES.
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THEY DO THIS TO INCENT PARENTS
TO SAVE FOR COLLEGE.
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AND IT CAN BE A MEANINGFUL
DEDUCTION.
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IT'S A GOOD RULE OF THUMB TO
LOOK AT YOUR HOME STATE PLAN
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FIRST.
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WE DON'T HAVE A LOT OF EXTRA
MONEY EVERY MONTH BUT EDUCATION
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IS VERY IMPORTANT TO US.
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SO, IS IT REALLY WORTH IT TO
HAVE A 529 PLAN?
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AWESOME QUESTION.
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AND YES, THAT'S EXACTLY THE
REASON YOU WANT TO HAVE A 529
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PLAN.
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AND THE REASON IT MAKES SENSE IS
BECAUSE YOU'RE PUTTING IN A
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SAVINGS SYSTEM IN PLACE.
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SO, COLLEGE COSTS DON'T SNEAK UP
ON YOU OR YOUR CHILD.
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SO, IMAGINE THIS, YOU CAN START
A 529 PLAN WITH AS LITTLE AS
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$25.
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IN MANY CASES BUT
HYPOTHETICALLY, LET'S SAY YOU GO
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FOR A ONE TIME $100 CONTRIBUTION
TO START OFF.
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AND YOU PUT THAT IN A 529 PLAN
AT AN ANNUAL INTEREST RATE OF
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5%.
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YOU COULD ADD $25 DOLLARS A
MONTH TO THAT $100 AND END UP
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WITH NEARLY $7,000 AFTER 15
YEARS.
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NOW, WE ARE REALLY TALKING.
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SO, JUST AS YOU MAY
AUTOMATICALLY SUBMIT A CAR
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PAYMENT OR A CELL PHONE BILL.
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SET UP A WAY TO AUTOMATICALLY
CONTRIBUTE TO A 529 PLAN ON A
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REGULAR BASIS.
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IF YOU DO THAT, YOU'LL BE IN
GOOD SHAPE.
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WE HAVE A BIG FAMILY AND HOW CAN
EXTENDED FAMILY MEMBERS
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CONTRIBUTE?
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SUCH AS MY BROTHER OR MY
PARENTS.
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WHAT CAN THEY DO TO GET
INVOLVED?
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WELL, IT TURNS OUT THEY CAN DO A
LOT.
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WHICH IS GREAT.
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BUT THE KEY IS TO MAKE IT EASY
FOR OTHERS TO CONTRIBUTE.
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CERTAINLY, A CHILD CAN HAVE
MULTIPLE 529 ACCOUNTS IN THEIR
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NAME.
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HAVING SAID THAT, SINCE IT'S
EASY FOR FAMILIES TO CONTRIBUTE
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TO AN ACCOUNT SET UP BY A
PARENT.
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IT'S COMMON FOR GRANDPARENTS,
GOD PARENTS, LOTS OF WELL
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INTENTIONED PEOPLE TO ADD FUNDS
TO THE ACCOUNT WHICH CAN BE DONE
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ELECTRONICALLY, OR BY MAIL.
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AND IT'S A GREAT GIFT IDEA.
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PERHAPS IT BECOMES THE NEW GO TO
BIRTHDAY GIFT IN YOUR FAMILY.
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HOW DOES A 529 PLAN AFFECT
FINANCIAL AID?
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ARE YOU LESS LIKELY TO GET A
SCHOLARSHIP WITH A 529 BECAUSE
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THEY FIGURE YOU ARE ALREADY SET?
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COMPARED TO CERTAIN OTHER
SAVINGS VEHICLES, A COLLEGE
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SAVINGS PLAN HAS A RELATIVELY
MINIMAL IMPACT ON A STUDENT'S
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ABILITY TO RECEIVE MERIT BASED
FINANCIAL AID.
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INCLUDING ACADEMIC OR ATHLETIC
SCHOLARSHIPS AS WELL AS STUDENT
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LOANS AND GRANTS.
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IT DOES VARY BY COLLEGE SO BE
SURE TO CHECK WITH YOUR SCHOOLS
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OF INTEREST.
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HOW DOES IT WORK?
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SHOULD WE OPEN OUR OWN 529 OR
SHOULD WE CONTRIBUTE TO THE ONE
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THAT OUR SON HAS OPENED FOR OUR
GRANDCHILD?
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YOU SHOULD CERTAINLY CHECK WITH
YOUR FINANCIAL ADVISOR ABOUT
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YOUR OWN PARTICULAR SITUATION.
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BUT HERE'S WHAT I CAN TELL YOU.
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FEDERAL STUDENT AID FACTORS IN
EXPECTED FAMILY CONTRIBUTION OR
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EFC.
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AND THOSE EXPECTATIONS GO UP
SIGNIFICANTLY MORE IF THERE'S A
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WITHDRAWAL FROM A GRAND PARENT
OWNED 529.
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SO, MATHEMATICALLY, YOU MAY BE
BETTER OFF CONTRIBUTING TO A
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PARENT OWNED ACCOUNT.
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OR TRANSFERRING OWNERSHIP PRIOR
TO WITHDRAWALS.
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AND A THIRD OPTION IS TO DEFER
WITHDRAWALS UNTIL AID FOR THE
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FINAL ACADEMIC YEAR HAS ALREADY
BEEN AWARDED.
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BECAUSE AT THAT POINT, ANY
FINANCIAL AID HAS ALREADY BEEN
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SET.
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IN OTHER WORDS, YOU WOULD HELP
PAY FOR THEIR LAST YEAR.
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YOU ARE THE CLOSER.
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WHAT HAPPENS IF MY CHILD DECIDES
HE DOESN'T WANT TO GO TO SCHOOL?
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THEN WHAT HAPPENS TO MY 529
PLAN?
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IT HAPPENS.
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THE GOOD NEWS THERE IS THE 529
CAN BE TRANSFERRED TO ANOTHER
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ELIGIBLE FAMILY MEMBER.
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SO, IF YOU HAVE MULTIPLE
CHILDREN THE FUNDS SIMPLE MOVE
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USUALLY TO YOUNGER SIBLING.
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ALSO, 529 PLANS WORK FOR
VOCATIONAL AND TECHNICAL
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SCHOOLS, CULINARY SCHOOLS, TRADE
SCHOOLS.
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YOU'VE GOT A LOT OF OPTIONS.
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THEIR ARE TAX RAMIFICATIONS IF
MONEY IS TAKEN FROM A 529
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ACCOUNT AND NOT USED FOR
EDUCATION.
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NON QUALIFIED WITHDRAWALS MAY BE
SUBJECT TO FEDERAL AND STATE
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INCOME TAXES AND AN ADDITIONAL
FEDERAL 10% TAX.
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SOME STATES ALSO IMPOSE THEIR
OWN PENALTY FOR NON QUALIFIED
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WITHDRAWALS.
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BUT IT'S NOT A HUGE PENALTY.
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IS THERE A WEBSITE THAT WE CAN
GO TO TO LEARN MORE?
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SURE!
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IN FACT THERE'S A VERY USEFUL
WEBSITE.
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JUST GO TO
TIAA-CREF
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THAT'S
CREF.ORG/529PLANS.
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THERE YOU CAN LEARN MORE ABOUT
529 PLANS OR EVEN OPEN A 529 IN
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ONE OF THE 11 STATE PLANS THAT
TIAA CREF FINANCIAL INC MANAGES.
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ONCE YOU'VE READ THE DISCLOSURE
BOOKLET AND DECIDED ON YOUR
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INVESTMENT OPTIONS IT DOESN'T
TAKE LONG TO START A 529.
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ABOUT 15 MINUTES ONLINE.
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OR 5-7 BUSINESS DAYS IF YOU ARE
MAILING IN A PAPER APPLICATION.
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THANK YOU SO MUCH.
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YOU ARE SO HELPFUL TODAY.
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OH GOOD!
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I'M SO GLAD.
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THANK YOU GUYS.
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AND THANKS EVERYONE FOR BEING
PART OF THIS IMPORTANT
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DISCUSSION.
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I HOPE IT WAS HELPFUL TO PARENTS
AND GRAND PARENTS ACROSS THE
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COUNTRY.
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THERE ARE METHODS TO FINANCE
YOUR CHILDREN'S COLLEGE
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EDUCATION.
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AND IT ALL STARTS WITH FAMILY.
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CONSIDER GIVING THE GIFT OF
EDUCATION TO YOUR CHILD,
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GRANDCHILD, OR LOVED ONE BY
OPENING A 529 PLAN ACCOUNT AS
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SOON AS POSSIBLE.
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AND THEN, KEEP CONTRIBUTING.
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(MUSIC)
TO SEE THIS PORTION OF
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THE SHOW AGAIN, GO TO THE
DESIGINGSPACES.TV
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KIDS SPACES
SECTION.
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AND CLICK ON THE TIAA CREF
VIDEO.
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ALSO, YOU'LL FIND A LINK TO THE
TIAA CREF WEBSITE.
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FOR MORE INFORMATION
ABOUT ANYTHING YOU'VE SEEN ON
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TODAY'S SHOW OR TO FIND OUT HOW
TO BE PART OF THE SHOW, LOG ON
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TO
DESIGNINGSPACES.TV
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YOU CAN
VISIT THESE WEBSITES TO LEARN
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MORE ABOUT THE PARTICIPANTS ON
THIS EDITION OF DESIGNING
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SPACES.
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