The restless mind: 529 college savings plans provide a world of options
¹ When Kelly Davidson decided he wanted to make the transition a career as a high school teacher, knew he had to go back to school to achieve its objective and would be expensive. He also knew that the search a graduate degree potentially affect your ability to save for retirement, so she met with Smith Barney Financial Advisor to develop a strategy that will help her to return to school in five years.
Over time is a key factor, the Advisor suggested that a 529 College Savings Plan name section of the IRS code that authorized its creation, would be the best way to meet education funding-Kelly objectives. Use of revenue an agreement, Kelly set up a 529 plan for her and launched a systematic investment plan to help your potential to maximize the value of the account. Kelly Five Year Plan was underway, but one thing she had not foreseen: right before she was scheduled to return to school, Kelly's husband, an executive of a multi-national corporation, was offered a lucrative job in London. Unfortunately, Kelly's ratings were not easily transferable, so even if I wanted continue teaching, she would have to take additional courses for certification in England.
Fortunately, Kelly had saved for her graduate studies in a 529 account, so funds could be used at any accredited college in the world. She decided to give new teachers' certification courses and apply to business school instead. Kelly is now pursuing his MBA at London Business School, one of the top three MBA programs in the world, ² and the use of 529 plan assets to pay their tuition and related expenses.
In the rapidly globalizing economy today, Kelly's situation is not unique. Each year, thousands of American students or participate in study abroad, or to enroll full time at schools and universities outside the United States. In fact, according to a recent survey of college-bound students, 55 percent said they are confident or very confident that will participate in a program of study abroad, and another 26 percent indicating a strong desire to study abroad. ³
In response to the great demand, many colleges now offer a range of international learning programs, ranging from Semester at Sea program of cultural immersion and multi-city. However, despite the large number of international programs available, many students (38 percent) still cite the high costs at the top. reason for lack of participation in study programs abroad ³ In addition, financial support for International Studies presents its own challenges: the eligibility requirements additional residency, grades, credit hours, and age to name a few-must be met, and U.S. foreign and schedules differ half which can delay the loans and federal aid.
However, there are options for those who want to finance an education abroad, including 529 College Savings Plans. The plans allow tax-free accumulation of assets and federal tax-free withdrawals for qualified higher education expenses, and the characteristics (flexibility, control and multiple investment options) that makes 529 plans attractive to funding education in the United States are also available when plans are used institutions.4 accredited foreign
The search for eligible foreign institutions
Anyone can search for a particular school, or see a list of all eligible foreign institutions by querying the database of the School Federal search:
- Visit http://www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet
- Select the school year from the dropdown menu, and select "Search" from the options available
- In the State drop-down box, select "foreign country" full requirements for schools in other countries, or if the school is located in Canada, Mexico or any U.S. territory, you can limit your search by selecting the desired country
More than 4005 institutions foreign higher education are eligible for federal rules that allow tax-free withdrawals from a 529 plan. A list of eligible foreign institutions is available in the search database Federal School Code Free Application for Federal Student Aid (FAFSA) website.
"The test for inclusion any school in particular is their right to participate in Title IV federal financial aid programs, "says Joseph Hurley, founder of SavingforCollege.com." Most of degree-granting four-year colleges and the community, and graduate schools have the right, professional and private schools and many will. "
529 Plans International Learning Support: three ways to use 529 plans Abroad
Historically, parents have used 529 plans to fund their higher education needs of children in the U.S., but children and adults can also be used to finance plans study abroad. Here are three ways adults can use the 529 plan assets to support their own learning International:
- 1. Convert a hobby into something more. Many people use their retirement to devote more attention to their hobbies, and with 529 assets is a good way. If you are passionate gardening, you can enroll in a program of study of horticulture at the Agricultural University of Wroclaw, Poland. Or, take your love of cooking to a higher level enrolling in the School of French cuisine, which could become a master of French cuisine!
- 2. Learn a new language where it is spoken. As the world becomes a global village, knowledge of foreign languages ??is becoming a necessity. Language books and tapes can be helpful, but there is no substitute for learning a language in an intensive program in its native environment.
- 3. Continue with professional development. Training continuity is one of the pillars of every successful career. If you are looking for career advancement in the international arena, you can enroll in education programs continuous, such as those offered in the School of Continuing Education and Professional Studies at the Chinese University of Hong Kong.
Despite their interests and aspirations professionals, it is likely international learning programs and opportunities that can help improve and enrich your life. Visit the Federal School Code database search to see a list of eligible foreign institutions.
It is a 529 plan right for you?
A 529 savings plan is one of the best ways to save tax benefits for higher education, whether to study in the U.S. or abroad. Most plans to offer several options for asset allocation, and also allow you to contribute by lump sum or through a systematic investment plan as a payroll deduction. You should consider investing in a 529 plan if you are:
- A parent concerned about rising college costs,
- A grandparent who wants to help save for education expenses of their future grandchildren
- A retiree who would like to develop an existing hobby a serious, full-time interest
- An "empty nest syndrome," which is still active in the workforce, but has to return to school to remain competitive
- A professional who is considering returning to school to get a second title, change careers, or to improve their professional skills
- An adult who wants to help a child in your life, a niece, nephew, godchild or saving for future college expenses
As more higher education institutions implement programs to address international the growing demand, opportunities for study abroad are available that were twenty years ago. If you already have an education plan, consider whether study abroad is an option that would like to continue in the future. If you need help to develop an education plan, a financial advisor can help you get started, and can even customize a proposal based on projected costs in the schools you are considering.
If you are studying in the U.S. or beyond borders the country, one thing is certain: the costs of college are in place, so it's important to start early. The world is at your feet, take advantage of everything has to offer.
¹ This name is a pseudonym. Similarities name to any person living or dead is purely coincidental.
² Source: 2008 Global MBA Rankings, Financial Times
³ aspiring college students interested in studying abroad and other international learning activities, CollegeBoard.com, January 2008
4 Assets must be used for qualified higher education expenses. However, the search for a title is not a prerequisite for tax-free withdrawals for qualifying. Transportation costs are not considered a qualified expense.
5 Search Results on August 15, 2008. See Searching for eligible foreign institutions in this article for the methodology search.
Graeme H. Patey is a financial advisor with Smith Barney located in Cleveland, Ohio, and can be reached at 216-523-3015 and / or graeme.patey @ smithbarney.com.
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About the Author
Graeme H. Patey specializes in developing customized financial strategies. He employs a consultative approach on the financial and investment needs of high net-worth individuals and financial services to businesses.