All articles tagged with #529 plans
Some parents are rethinking traditional college savings strategies like 529 plans due to rising costs, economic uncertainty, and the desire for more flexibility, leading many to explore alternatives such as brokerage accounts and life insurance policies for their children's future.
The FAFSA's new "Student Aid Index" calculation simplifies the financial aid process, allowing grandparents to contribute to college savings without negatively impacting aid eligibility. Middle-income families stand to benefit the most, as the streamlined form reduces the impact of assets held in grandparent-owned 529 plans. While this change is advantageous, families should consider potential implications for Medicaid eligibility and nonfederal institutional aid. Additionally, 529 plans offer various benefits for college savings, and recent expansions further encourage families to save for higher education.
Retirement planning in 2024 sees significant changes with increased contribution limits for IRAs and 401(k)s, the ability to convert 529 plans to Roth IRAs, penalty-free emergency withdrawals, and the introduction of Starter 401k plans for small businesses. The new IRA and 401(k) contribution limits are $7,000 and $23,000, respectively. Unused 529 plan funds can now be rolled over into a Roth IRA for the beneficiary without penalty, given certain conditions. Individuals can make a $1,000 emergency withdrawal from their retirement accounts without a penalty, and victims of domestic abuse can withdraw up to $10,000. Starter 401k plans aim to make it easier for small businesses to offer retirement benefits. These changes necessitate updated retirement strategies and possibly consulting a financial advisor.
Suze Orman, renowned personal finance expert, believes that approximately 95% of Americans are financially illiterate. She emphasizes the importance of understanding terms like Roth IRA, retirement accounts, wills, trusts, durable power of attorney, advanced directives, and 529 plans. Orman recommends Roth accounts for their flexibility in retirement withdrawals and highlights the significance of estate planning to avoid government distribution of assets. Additionally, she encourages education on student loans and compounding interest. Orman aims to empower individuals to improve their financial literacy and offers her expertise as a resource.