Is a 529 Plan the Best College Savings Plan?

Where do you put your money?

You contribute after-tax money, so gets US off your back because the money growing from now on is all tax-free as long as it’s use for college expenses.

There is a contribution CAP of about $300k to $350k, depending on the state of the plan.

What if you child decide to not go to college and wants to be a rock star instead?

In that case, you can change the beneficiary of the 529 plan to a close relatives, such as you other children, grandchildren or even yourself or your spouse.

However, if no one is going to use that money for college education and you decide to withdraw the money, you’ll be hit with a 10% penalty PLUS income tax.

Besides, money in a 529 Plan is considered during financial aid application process as parents’ assets.

Let’s take a look at another very similar savings vehicle…the ROTH IRA.

The ROTH IRA is not just for retirement.

You contribute after-tax money, so gets US off your back because the money growing from now on is all tax-free as long as you withdraw your money after 59 1/2.

But Uncle Sam is very smart, he limits what kind of money you can contribute AND how much you can contribute each year.

Contribution must be earned  income, meaning from a JOB.

The current annual contribution limit of $5,500, an extra $1,000 for catch-up if you’re 50 years old.

10% penalty on withdrawal before 59 1/2 PLUS income tax except if you’re using the money for college expenses, down payment for first home, and medical expenses.

An of course, if you take the money out after you turn 59 1/2, you can use it whatever way you want.

Best of all, money in an retirement account is not considered when applying for financial aid.

However, there is a income limit for contribution as well. So if you make too much money, you cannot contribute to a ROTH IRA.

What if you want to contribute more than $5,500 a year and still take advantage of tax-free growth?

* QUICK FACTS: $5,500 a year for x40 years = $220,000. Is that enough for your retirement. Rule of thumb is you’ll need x20 times of your current income for a COMFORTABLE retirement.

Your next option is an indexed universal life insurance.

You contribute after-tax money, so it gets Uncle Sam off your back because the money growing from now on is all tax-free.

The money in the cash account can be used for anything, such as college tuition and expenses. If your child decides to not attend college, he or she can use the money as down payment for his/her first home or invest in a business, etc.

When my daughter earns her first paycheck at 16, I opened a ROTH IRA for her to get her started. Even though she does not make $5,500, but because I started her early, I put the full amount of her earned income, so she has more years to save. We all know $5,500 a year is not a lot. With the money in the ROTH IRA, we invest in low-fees index funds.

All her gift money from birthdays and holidays goes into her life insurance cash account making “money babies” safely at 10% annual return and tax-free.


How to Bullet Proof Your Family Fortune & Sanity?

Financial Check-up

You understand the importance of protecting your assets and belongings. You insure your homes, cars, computer, iPad, iPhone, etc. Are you really properly protected? Is your most valuable asset (YOU) protected?

What if you die too soon? Who’s going to continue to pay for your family’s mortgage? Your family’s living expenses? Your children’s college tuition? Will your spouse and children be able to support themselves without your income?

What if you become disabled or chronically ill? Where’s your income coming from? How will you pay for your care? Will your family have to quit their job to take care of you?

What if you live a long life? Will your retirement savings be enough to provide for you until you die? Will you still be able to take care of yourself? Will you still be able to work and earn an income? Will your medical expenses increase?

These are all the question that you want an answer to when the time comes.

Replaces your income and provides for your family after you pass,

Provides an endless stream of retirement income you can’t outlive,

Pays for your long-term care when you cannot take care of yourself anymore,

Pays for your medical expenses when you’re chronically or terminally ill.

College Planning Timeline

S.M.A.R.T. College Planning for a Debt Free Future

Are you concern about not able to provide for your child’s college education? Are you worry that you may have to take out home equity or personal loan to pay for your child’s college education? Are you worry that your child have to work during college to help pay for college tuition?

Cost of college is certainly a big concern nowadays. Most families do not have proper college planning. Most people focuses on saving for retirement and paying off debts, and only few plan for their children’s future.

College tuition, like everything else, has increased significantly over the years. In fact, cost of college goes up 6-7% every year. Currently in-state public school average $20,000 per year and private college average $40,000 – $60,000 for an undergraduate degree.

Did you know the average student takes 8 years to complete an undergraduate degree, which is usually a 4-year degree? That’s an additional 4 years of college tuition and 4 less years of potential earnings.

Most students change major about 3 times during their college years.


The son of a friend of a friend. I hope we had help this family with college planning. The son of a friend of my friend went to college and graduated from medical school with a medical doctor degree. After all the years and money spent acquiring the medical degree, the son decided he did not want to be a doctor.

You would never figure out what he became…

…a Catholic priest.

The parents did not know if they should feel blessed or angry with their son’s decision.


Because of the indecisiveness, many students graduate from college with enormous student loans.

Did you know the average student loan today is $37,172 for an undergraduate degree. Student with a professional degree can easily end up with a $150,000-$200,000 student loan after graduation.

And many college graduates end up in jobs that’s not even related to their course of study because they NEED a job to pay for their living expenses and start repaying their student loans.

That’s what happened to my friend’s daughter who graduated with a fancy but obscure science degree that she cannot find a job for, so she’s now working for some insurance company getting $10 an hour pay, the same pay as my teenager.

Do you want that for your son or daughter? Is that how you want your son or daughter to start their adult life?

In fact, student loans have now surpassed consumer debts in US.

Related article: Student Loan Debt In 2017: A $1.3 Trillion Crisis


  • minimize out-of-pocket expenses
  • maximize free money and resources
  • savings growth rate to at least beat inflation
  • maximize income tax benefits
  • graduate on-time with the right major
  • “hide my money and look poor”


Smart College Planning Workshop

College Planning Made Simple…

College Planning Made Simple…

It’s never too early to starting college planning. In fact the earlier the better. Just like everything else, college tuition has increased significantly…

There are many choices of financial vehicles for saving for college, but which one is the best for your child and your family.

Early and proper financial and college planning can help you decide what’s the best college for your son or daughter, and how to qualify for the most financial aid.

Completing the FAFSA is not enough…

Little known facts: income from small businesses (less than 100 employees) and cash in life insurance do not count against financial need.