Terry I have a question about what your thoughts are for best planning for a college find. I have little knowledge about what the 529 plan is in Illinois I just know some people it know use it. I don’t trust necessarily the govt to handle my $ especially in broke a$$ IL. What are your best suggestions? Thanks.
Btw I have a 7 & a 4 year old.
Terry Says: You get a slight tax deduction (for up to $10,000 of contributions to the Illinois 529 plans each year), but that is the only advantage of using the Illinois plan. I gave up on it when they allowed one of their fund management companies to literally “rip-off” fund shareholders in a very conservative fund in 2008. A portion was repaid, but only a portion. And the state did not remove the fund management company at that time. I said publicly then, and haven’t forgotten, that I wouldn’t use the Illinois 529 plans.
By the way, there are two types of plans — those sold by brokers, and those where you invest directly. I have no idea why any parent would make this relatively easy purchase through a broker, with the attendant costs. In Illinois, the “direct’ program is the Bright Start Savings Plan, and the advisor-sold program is Bright Directions.
If you want to keep it simple, I would just go to Vanguard.com and open an account in their plan, which is based on very low cost Vanguard index funds. Remember, the money from the plan can be invested in ANY state plan, and used for college in ANY state, and any school, for any child in your family! So what matters in the long run is costs and results.
Read more at this link at Morningstar.com, which rates state 529 College Savings Plans: http://news.morningstar.com/articlenet/article.aspx?id=358098