NC's 529 College Savings Plan Recommended
Money magazine, in a August 2007 article on College Savings Plans, recommended North Carolina's 529 Plan as a good choice for NC residents. NC's plan features:
- A tax deduction for contributions (up to $5,000 for a married couple filing jointly)
- Tax free distributions (when used for qualified higher education expenses
- Low fees
- Multiple investment options
- Use at any college in the U.S.
See my other 529 postings for a more detailed description of the tax rules for 529 Plans.
The NC 529 savings plan is a scam. I was encouraged to put money in it by my employer telling me it was a good way to save for college. That the money would grow more than it would in a bank. Well my daughter just finished high school and they sent me a statement showing the value of the account was way less that what I put in. There is fine print about "fees charges and expenses" they don't tell you about up front. You trust an institution like UNC not to be dishonest. Whatever little tax deduction I got at one time doesn't help now. I hope somebody looks into where this money is going and they stop allowing it to be advertised as being all benefits and no downside like this blog post does.
RESPONSE: Most of the investment choices in any 529 Plan are subject to decreases in value just as with the stock market as a whole. I am not sure what happened in your particular situation, and while some question the advisability of investing in 529 Plans, I certainly would not agree that the NC's 529 Plan is a "scam." I have two accounts that have both grown in value over time.