why 529 plans are a bad idea?

why 529 plans are 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 on 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 Earnings in a 529 plan grow tax-free and are not taxed when they're withdrawn.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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What are the negatives of a 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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What's better than a 529 plan?
Custodial UGMA and UTMA accounts can be used for purposes other than education. Roth IRAs have tax advantages similar to 529 plans and they don't count as assets for financial aid purposes.
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