Mid career professionals (those with 3-5 years experience in their fields) are often very busy juggling, work, family and social schedules. When you first setup your college savings plans, you likely took the time to review plan options and carefully set contribution levels based on your (then) current and expected life circumstances. You may have just begun a family or a new career. Now, a few years later, its a good time to organize, analyze and re-balance.
- Take stock of the plans you already participate in. If you already participate in one or more of the state 529 college savings plans, statements should be coming to you regularly, either in electronic or paper form. If you’re not already doing so, create a file to collect statements for the year. Double check to make sure you have a copy of all statements for 2016. If not, you can usually download a copy of recent statements from your plan’s web-site.
- Save your statements file in a secure location. This can be on premise or cloud based. Use reasonable caution. In general, use text, email and chat-site transmission for standard communication, not transferring private information. When using cloud-based services, look for a secure login requirement, as well as SSL in any site where you upload, download or enter financial documents, social security numbers, bank account or credit card information. Change passwords regularly. Remember: this is your personal financial information.
- Check out each account’s earnings over the year. If you participate in a state run 529 plan, you may have chosen a plan option based on the year of expected first attendance at college. Compare plan performance against performance of the market in general (Major Market Indices) and then against other states’ 529 plans. If you’re saving for the future needs of young children or grandchildren your plan’s performance is often tied closely to these indices. If your future (or current) student is only a few years away from attendance you can generally expect performance to become more conservative. Keep in mind: the tax benefit grows as earnings accumulate in the plan. If performance hasn’t lived up to the rest of the market, find out if your plan has other options that line up better with your savings and tax goals.
- Rebalance Investments and Adjust Contributions. Your plan administration web-site may have a page or section where you can directly control changes to the plan within limits. For instance your plan may allow participants to add or remove bank accounts for auto-withdrawal and change recurring contribution amounts.
- Talk to your CPA about the plans you participate in and your future savings goals. Your CPA can help you understand the various types of tax preferred savings vehicles and how to get the greatest tax benefits!
Article By: Sound Accounting & Technology LLC
