Planning for the next generation, and for what you will leave them, often varies depending on what you have and what your loved ones will need. As a result, it is no surprise that a recent by Morningstar Inc. found a sharp increase in contributions to Section 529 plans in 2012. Reuter’s reported on these findings in an article titled “Morningstar: 529 college savings plans up in 2012 despite some lags.”
The article describes a 529 plan as a tax-advantaged account that encourages savings now toward exorbitant college costs later. That said, not all plans are alike and the study found some were far better than others, and some were even of questionable worth. [Note: For a review of 529 plans and other options, read the page three article of my May 2012 newsletter titled "Leveraging Legacies."]
The final analysis: Although 529 education savings plans as a whole underperformed against some mutual funds, 2012 saw a 25% rise in 529 plan assets against a 13.4% gain in the S&P index.
Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.
Reference: Reuters (April 22, 2013) “Morningstar: 529 college savings plans up in 2012 despite some lags”