why 529 is a bad idea?

why 529 is a bad idea?
The largest drawback to a 529 plan is that colleges consider it when deciding on financial aid. This means your child could receive less financial aid than you might otherwise need.
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Can you lose money in a 529 plan?
True or false: I will lose the money if my child doesn't go to college or gets a scholarship and doesn't need all the money. False. You don't lose unused money in a 529 plan. ... You can withdraw the amount of any scholarship awards from your 529 without penalty; federal and state income taxes on the earnings still apply. Feb 9, 2021
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Is a 529 Plan Really Worth It?
529 plans typically offer you unsurpassed tax breaks. Earnings in a 529 plan grow tax-free and are not taxed when they're withdrawn. This means that however much your money grows in a 529, you'll never have to pay taxes on it. However, you do not get to deduct your contributions on your federal income tax return. Oct 19, 2020
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Is the 529 penalty really that bad?
Earnings accumulate on a tax-deferred basis and are entirely tax-free if used to pay for qualified higher education expenses. Non-qualified distributions from a 529 plan, however, incur ordinary income taxes plus a 10% tax penalty, and may be subject to state income taxes. May 25, 2018
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What are the disadvantages of 529 plan?
There are significant upfront costs. ...
Your child's need-based aid could be reduced. ...
There are penalties for noneducational withdrawals. ...
There are also penalties for ill-timed withdrawals. ...
You have less say over your investments.
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