529’s — How to choose?
Is there a state 529 you prefer? I heard you say something about who owns it, as a grandparent what should I do?
Terry Says
If you are an Illinois resident, then you get a tax deduction of up to $10,000 on STATE income taxes on an individual return ($20,000 on a joint return). And Illinois is a top-rated plan. If you are not an IL resident, check to see if your state offers a state income tax deduction. Remember, you can join any state’s plan, no matter where you or the child live. And the money grows tax-free for college expenses at any school, any state.
As to “ownership” of the plan, if a grandparent owns the plan, they family does not have to disclose it on the financial aid forms. BUT, in the year the money is withdrawn to pay for college, it is considered a “student asset” and will count far more heavily against the family in the NEXT year’s financial aid calculation. So save this money for the last year of college, when they won'[t be applying for any aid in the next year!
