529 Tuition plans details...

Posting for Mayoor on the Blog...Please post replies on the blog itself and NOT via e-mail so that we can keep a respository of responses for future use...this is a great post!

Hi Guys,
As promised here is my first contribution to the group. End to end info on 529 plans.
Disclaimer: Because it’s kind of an investment for future so please do your own homework before jumping in. I will act more as a resource to help find details and look up answers for any questions we all need answered for the group.
Here are the basic details on a 529 plan:
http://www.collegesavings.org/index.aspx website is a non-profit org and has relevant details for all the 529 plans out there.
To understand what is a 529 plan click on this link (http://www.collegesavings.org/whatIs529.aspx).
In essence there are two types of plans:

1. Pre-paid (You pay at today’s tuition rate but are guaranteed to get tuition when the kid is ready to go to college in a decade or two).

2. Savings Plan (More like investing in mutual funds or stocks). You get returns depending on how the market does. Similar to Roth IRA’s the money grows tax free if withdrawn for qualified expenses.
Each state has its own – Prepaid plan, Savings plan or Advisor sold plans. For Texas these are the 4 plans:
· Texas Tuition Promise Fund - Prepaid Plan
· Texas College Savings Plan - Direct-sold
· LoneStar 529 Plan - Advisor-sold
· Texas Guaranteed Tuition Plan - Prepaid Plan

Q. Does my child have to go to an in-state school?
A. No. Funds can be used at any eligible educational institution in the country to pay for qualified higher education expenses. "Eligible educational institutions" are accredited post-secondary educational institutions offering credit toward a bachelor’s degree, an associate’s degree, a graduate level or professional degree, or another recognized post-secondary credential. Certain proprietary institutions and post-secondary vocational institutions and certain institutions located in foreign countries are also eligible educational institutions. To be an eligible educational institution, the institution must be eligible to participate in U.S. Department of Education student aid programs.

Regards,
Mayoor Tandon