Singletary: A 529 eases stress of sending kid to college
By Michelle Singletary
Published: May 27, 2016, 6:00am
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My son is about to head to college. But I have a lot of concerns with Kevin. He falls on the autism spectrum, so my husband and I have been meeting with college administrators to map out his plan for success. He’s going to the University of Maryland, Baltimore County. So far, the school has exceeded our expectations in responding to his needs. The president of UMBC, Freeman Hrabowski, even asked to meet with us.
Hrabowski said he understood when Kevin didn’t look him in the eye at times and didn’t appear to be focused. Hrabowski engaged Kevin with genuine interest and respect. He seemed to get him. The encounter made me tear up.
My son had so wanted to go to a four-year university and live on campus. Hrabowski and his staff made us feel that it’s possible.
I tell you this because sending a child to college can come with anxiety, even if he or she is neurotypical. If your child has special needs, your concern can be off the charts. But I’m grateful there is one less thing to cry about or fret over.
The funds needed for Kevin’s education — even for a summer program that will help him get acclimated to college — are sitting in his 529 college savings plan. My husband and I started saving for Kevin’s college expenses when he was 3. We made a few lump-sum payments at the beginning, but most of the money came from our monthly contributions of $210. Our target had been to save at least for costs at an in-state institution.
For some, that amount could be too much, but for many it isn’t. Over the years, between our contributions and investment returns — accounting for some down years — there’s enough for tuition, fees and room and board.
I have long been a fan of 529 plans. The earnings are not subject to federal tax or, generally, state tax if the beneficiary uses the money for qualified educational expenses at a college, university, vocational school or other post-secondary institution.
May 29, 529 College Plan Day, has become a time for states and financial firms administering the plans to promote the advantages of this investment option. If only the campaign lasted the whole year. A whopping 72 percent of Americans don’t know what a 529 plan is, according to the financial services firm Edward Jones. That’s up from 66 percent last year.
In the past two weeks, several parents have asked me about the 529. I met a mother in Chicago who was worried about how to save. I directed her to Illinois’ 529 Education Savings Plan, which, like many state plans, offers residents a tax break. In-state contributions are deductible up to $10,000 per parent per year ($20,000 if you’re married and filing jointly). I made her promise to sign up, and she did.
Another mother, in Maryland, had been discouraged from putting money in a 529 based on a misconception. She said she believed her children could only go to schools in the state where she held an account, which is not true. Money invested in a 529 can be used at any public or private eligible educational institution worldwide.
Don’t let misinformation stop you from saving in a 529 plan. Here are some places to get the truth:
• Your state’s 529 website. Type the name of your state and “529 plan” into the search bar. Stop first at the FAQ section.
Many states are now offering enrollment promotions. Virginia has been randomly awarding $1,000 a day to new accounts. For the eighth year, the Virginia baby born closest to 5:29 p.m. May 29 at participating hospitals will win a $529 contribution.
• Savingforcollege.com. This independent site contains a mountain of information about 529 plans. Download a free copy of “Family Guide to College Savings.”
• Morningstar.com. The independent investment research site has an annual ranking of 529 plans.
You’ve got enough to be nervous about when sending your child to college. Take the time to figure out what’s fact or fiction, and then save in a 529 plan.
Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.
