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Author: TMFBro Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121146  
Subject: Re: 529 Plan Date: 3/7/2002 10:14 AM
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Worldleader31,

The good thing about 529 savings plans is that distributions are tax-free (as long as they're used for qualified expenses, such as tuition).

A few things to know:
*Most states have their own flavor of the 529, but you don't have to choose the plan in your state of residence, or in your sister's state of residence. You can live in Florida, choose New York's plan, and your sister could go to school in Iowa.

*The investment choices in the plans are usually limited to mutual funds. I'm not sure if there are any plans that would let you buy I Bonds. Anyone?

*There are actually two types of 529 plans: pre-paid tuition plans and savings plans. With $15,000 and just four years to go, I'm not sure you'll get too many tuition credits in a pre-paid tuition plan. But it might be worth looking at (if she's not too old - plans put restrictions on how late someone can enroll in a pre-paid tuition plan).

*Here are some resources: a Kiplinger article on the best plans (http://www.kiplinger.com/features/archives/2001/September/managing/collegesavings2.html), a TMF Taxes article on 529s (http://www.fool.com/taxes/2002/taxes020111.htm) and the definitive source of info on 529s (www.savingforcollege.com).

Good luck!
Bro
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