The Wandering Mind: 529 College Savings Plans Provide A World Of Options

<h1>The Wandering Mind: 529 College Savings Plans Provide A World Of Options</h1>Author: <a title="Graeme H. Patey" href="http://www.articlesbase.com/authors/graeme-h.-patey/125489.htm">Graeme H. Patey</a> When Kelly Davidson¹ decided she wanted to transition from a career as a high school teacher, she knew she'd have to go back to school to achieve her goal-and it would be costly. She also knew that pursuing a graduate degree would potentially impact her ability to save for retirement, so she met with her Smith Barney Financial Advisor to develop a strategy that would help enable her to return to school in five years. With time being a key factor, the Advisor suggested that a 529 College Savings Plan-named after the section of the IRS code that authorized their creation-would be the best way to meet Kelly's education-funding goals. Using the proceeds from a settlement, Kelly set up a 529 plan for herself and launched a systematic investment plan to help her potentially maximize the account's value. Kelly's Five Year Plan was well under way, but there was one thing she hadn't planned for: right before she was slated to return to school, Kelly's husband, an executive at a multi-national corporation, received a lucrative job offer-in London. Unfortunately, Kelly's qualifications were not easily transferable, so even if she wanted to continue teaching, she would have to take additional certification courses in England. Luckily, Kelly had saved for her graduate degree in a 529 account, so she could use the funds at any accredited university in the world. She decided to forgo the additional teachers' certification courses and apply to business schools instead. Kelly is now pursuing her MBA at the London Business School-one of the top three MBA programs in the world²-and using her 529 plan assets to pay for her tuition and related expenses.   In today's rapidly globalizing economy, Kelly's situation is not unique. Each year, thousands of American students either participate in study abroad programs, or enroll full-time in colleges and universities outside of the United States. In fact, according to a recent poll of college-bound students, 55 percent indicated that they are certain or fairly certain they will participate in a study abroad program, and another 26 percent indicated a strong desire to study abroad.<a>³</a> In response to the high demand, many higher education institutions now offer a number of international learning programs, ranging from semesters at sea to cultural immersion and multi-city programs. However, despite the myriad of international programs available, many students (38 percent) still cite high costs as the top reason for lack of participation in study abroad programs.³ In addition, using financial aid for international studies presents its own challenges: additional eligibility requirements-residency, grades, credit hours, and age, to name a few-must be met, and foreign and US semester schedules differ which can delay loans and other federal aid. Still, 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 features (flexibility, control, and multiple investment options) which make 529 plans attractive for funding stateside education are also available when the plans are used with accredited foreign institutions.4  Searching for Eligible Foreign Institutions Anyone can conduct a search for a particular school, or view a list of all eligible foreign institutions by querying the Federal School Lookup database: <ul> <li>Visit <a target="_blank" href="http://www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet">http://www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet</a></li> <li>Select the school year from the drop down box, and select "Search" from the options available</li> <li>In the state drop-down box, select "Foreign Country" to view all eligible schools in other countries, or if the school is located in Canada, Mexico or any U.S. territory, you can narrow your search by selecting the appropriate country</li> </ul>   <a>How It Works</a> Over 4005 foreign higher education institutions are eligible under the rules permitting federal tax-free withdrawals from a 529 plan. A list of eligible foreign institutions is available in the Federal School Code Lookup database on the Free Application for Federal Student Aid (FAFSA) website. "The test for any particular school's inclusion is its eligibility to participate in Title IV federal financial aid programs," says Joseph Hurley, founder of SavingforCollege.com. "Most degree-granting four-year schools, junior and community colleges, and graduate schools will qualify, as will many proprietary and vocational schools." 529 Plans Support International Learning: Three Ways to Use 529 Plans Abroad Historically, parents have used 529 plans to fund their children's higher education needs in the US, but children and adults can also use the plans to finance studies abroad. Here are three ways adults can use 529 plan assets to support their own international learning: <ul> <li>1. Turn a hobby into something more. Many people use retirement to dedicate more attention to their hobbies, and using 529 assets is a great way to do so. If you're passionate about gardening, you could enroll in a horticultural studies program at Agriculture University of Wroclaw in Poland. Or, take your love of cooking to the next level by enrolling in the Ecole Superieure De Cuisine Francaise; you could become a master of French cuisine!</li> <li>2. Learn a new language-where it's spoken. As the world becomes a global village, knowledge of foreign languages is becoming more of a necessity. Language books and tapes can be a great help, but there is no substitute for learning a language in an intensive program in its native environment. </li> <li>3. Continue professional development. Continuing education is one of the cornerstones of every successful career. If you're seeking to advance professionally in the international arena, you can enroll in continuing education programs, such as those offered at the School of Continuing & Professional Studies at The Chinese University of Hong Kong.</li> </ul> Regardless of your hobbies and professional aspirations, there are likely international learning programs and opportunities that may help to enhance and enrich your life. Visit the Federal School Code Lookup database to see a list of eligible foreign institutions.       Is A 529 Plan Right For You? A 529 savings plan is one of the best tax-advantaged ways to save for higher education-whether you plan to study  in the US or abroad. Most plans offer several asset allocation options, and also allow you to contribute via lump sum or through a systematic investment plan such as a payroll deduction. You should consider investing in a 529 plan if you are: <ul> <li>A parent concerned about the rising costs of college,</li> <li>A grandparent who wants to help save for your grandchildren's future education expenses</li> <li>A retiree who would like to develop an existing hobby into a serious, full-time interest</li> <li>An "Empty Nester" who is still active in the workforce, but needs to return to school to remain competitive</li> <li>A professional who is considering going back to school to pursue a second degree, change careers, or to enhance your professional skills</li> <li>An adult who wants to help a child in your life- a niece, nephew, or godchild-save for future college expenses</li> </ul>   As more higher education institutions implement international programs to address the growing demand, opportunities to study abroad are more available than they were twenty years ago. If you already have an education plan, consider whether studying abroad is an option you'd like to pursue in the future. If you need help developing an education plan, a Financial Advisor can help you get started, and can even customize a proposal based on projected costs at the schools you're considering. Whether you plan to study stateside or beyond the country's borders, one thing is certain: college costs are on the rise, so it's important to start early. The world is your oyster; take advantage of all it has to offer.     ¹ This name is a pseudonym.  Name similarities to any individual living or deceased are purely coincidental. ² Source: 2008 Global MBA Rankings, Financial Times ³ College-Bound Students' Interests in Study Abroad and Other International Learning Activities, CollegeBoard.com, January 2008 4 Assets must be used for qualified higher education expenses. However the pursuit of a degree is not a prerequisite for tax-free qualifying withdrawals. Transportation costs are not considered a qualified expense. 5 Search results as of August 15, 2008. Refer to Searching for Eligible Foreign Institutions in this article for search methodology.     Graeme H. Patey is a Financial Advisor with Smith Barney located in Cleveland, Ohio and may be reached at 216-523-3015 and/or <a href="mailto:graeme.patey@smithbarney.com">graeme.patey@smithbarney.com</a>.       Assets can accumulate and be withdrawn federally tax-free only if they are used to pay for qualified expenses.  Earnings on non-qualified distributions will be subject to income tax and a 10% federal income tax penalty tax. Please consider the investment objectives, risks, charges and expenses associated with municipal fund securities including 529 Plans before investing. The offering statement contains this and other important information. To obtain an offering statement, please call your Financial Advisor or visit <a href="http://www.smithbarney.com" target="_blank">www.smithbarney.com</a> to locate a Financial Advisor in your area. Read the offering statement carefully before investing. Investments are subject to market risk and may fluctuate in value. Investors should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax benefit or other benefits that are only available for investments in such state's qualified tuition program.   Smith Barney does not provide tax or legal advice, and it is important to consult with a tax or legal advisor before investing.   © 2008 Citigroup Global Markets Inc. Member SIPC. Securities are offered through Citigroup Global Markets Inc. Smith Barney is a division and service mark of Citigroup Global Markets Inc. and its affiliates and is used and registered throughout the world. Citi and Citi with Arc Design are trademarks and service marks of Citigroup Inc. and its affiliates, and are used and registered throughout the world. Working WealthSM is a service mark of Citigroup Global Markets Inc. Citigroup Global Markets Inc. and Citibank are affiliated companies under the common control of Citigroup Inc.     INVESTMENT PRODUCTS: NOT FDIC INSURED • NOT GUARANTEED • MAY LOSE VALUEAbout 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.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/finance-articles/the-wandering-mind-529-college-savings-plans-provide-a-world-of-options-809105.html" title="The Wandering Mind: 529 College Savings Plans Provide A World Of Options">The Wandering Mind: 529 College Savings Plans Provide A World Of Options</a>

When Kelly Davidson¹ decided she wanted to transition from a career as a high school teacher, she knew she'd have to go back to school to achieve her goal-and it would be costly. She also knew that pursuing a graduate degree would potentially impact her ability to save for retirement, so she met with her Smith Barney Financial Advisor to develop a strategy that would help enable her to return to school in five years.

With time being a key factor, the Advisor suggested that a 529 College Savings Plan-named after the section of the IRS code that authorized their creation-would be the best way to meet Kelly's education-funding goals. Using the proceeds from a settlement, Kelly set up a 529 plan for herself and launched a systematic investment plan to help her potentially maximize the account's value. Kelly's Five Year Plan was well under way, but there was one thing she hadn't planned for: right before she was slated to return to school, Kelly's husband, an executive at a multi-national corporation, received a lucrative job offer-in London. Unfortunately, Kelly's qualifications were not easily transferable, so even if she wanted to continue teaching, she would have to take additional certification courses in England.

Luckily, Kelly had saved for her graduate degree in a 529 account, so she could use the funds at any accredited university in the world. She decided to forgo the additional teachers' certification courses and apply to business schools instead. Kelly is now pursuing her MBA at the London Business School-one of the top three MBA programs in the world²-and using her 529 plan assets to pay for her tuition and related expenses.

In today's rapidly globalizing economy, Kelly's situation is not unique. Each year, thousands of American students either participate in study abroad programs, or enroll full-time in colleges and universities outside of the United States. In fact, according to a recent poll of college-bound students, 55 percent indicated that they are certain or fairly certain they will participate in a study abroad program, and another 26 percent indicated a strong desire to study abroad.³

In response to the high demand, many higher education institutions now offer a number of international learning programs, ranging from semesters at sea to cultural immersion and multi-city programs. However, despite the myriad of international programs available, many students (38 percent) still cite high costs as the top reason for lack of participation in study abroad programs.³ In addition, using financial aid for international studies presents its own challenges: additional eligibility requirements-residency, grades, credit hours, and age, to name a few-must be met, and foreign and US semester schedules differ which can delay loans and other federal aid.

Still, 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 features (flexibility, control, and multiple investment options) which make 529 plans attractive for funding stateside education are also available when the plans are used with accredited foreign institutions.4

Searching for Eligible Foreign Institutions

Anyone can conduct a search for a particular school, or view a list of all eligible foreign institutions by querying the Federal School Lookup database:

Visit http://www.fafsa.ed.gov/FOTWWebApp/FSLookupServlet
Select the school year from the drop down box, and select "Search" from the options available
In the state drop-down box, select "Foreign Country" to view all eligible schools in other countries, or if the school is located in Canada, Mexico or any U.S. territory, you can narrow your search by selecting the appropriate country

How It Works

Over 4005 foreign higher education institutions are eligible under the rules permitting federal tax-free withdrawals from a 529 plan. A list of eligible foreign institutions is available in the Federal School Code Lookup database on the Free Application for Federal Student Aid (FAFSA) website.

"The test for any particular school's inclusion is its eligibility to participate in Title IV federal financial aid programs," says Joseph Hurley, founder of SavingforCollege.com. "Most degree-granting four-year schools, junior and community colleges, and graduate schools will qualify, as will many proprietary and vocational schools."

529 Plans Support International Learning: Three Ways to Use 529 Plans Abroad

Historically, parents have used 529 plans to fund their children's higher education needs in the US, but children and adults can also use the plans to finance studies abroad. Here are three ways adults can use 529 plan assets to support their own international learning:

1. Turn a hobby into something more. Many people use retirement to dedicate more attention to their hobbies, and using 529 assets is a great way to do so. If you're passionate about gardening, you could enroll in a horticultural studies program at Agriculture University of Wroclaw in Poland. Or, take your love of cooking to the next level by enrolling in the Ecole Superieure De Cuisine Francaise; you could become a master of French cuisine!

2. Learn a new language-where it's spoken. As the world becomes a global village, knowledge of foreign languages is becoming more of a necessity. Language books and tapes can be a great help, but there is no substitute for learning a language in an intensive program in its native environment.

3. Continue professional development. Continuing education is one of the cornerstones of every successful career. If you're seeking to advance professionally in the international arena, you can enroll in continuing education programs, such as those offered at the School of Continuing & Professional Studies at The Chinese University of Hong Kong.

Regardless of your hobbies and professional aspirations, there are likely international learning programs and opportunities that may help to enhance and enrich your life. Visit the Federal School Code Lookup database to see a list of eligible foreign institutions.

Is A 529 Plan Right For You?

A 529 savings plan is one of the best tax-advantaged ways to save for higher education-whether you plan to study in the US or abroad. Most plans offer several asset allocation options, and also allow you to contribute via lump sum or through a systematic investment plan such as a payroll deduction. You should consider investing in a 529 plan if you are:

A parent concerned about the rising costs of college,
A grandparent who wants to help save for your grandchildren's future education expenses
A retiree who would like to develop an existing hobby into a serious, full-time interest
An "Empty Nester" who is still active in the workforce, but needs to return to school to remain competitive
A professional who is considering going back to school to pursue a second degree, change careers, or to enhance your professional skills
An adult who wants to help a child in your life- a niece, nephew, or godchild-save for future college expenses

As more higher education institutions implement international programs to address the growing demand, opportunities to study abroad are more available than they were twenty years ago. If you already have an education plan, consider whether studying abroad is an option you'd like to pursue in the future. If you need help developing an education plan, a Financial Advisor can help you get started, and can even customize a proposal based on projected costs at the schools you're considering.

Whether you plan to study stateside or beyond the country's borders, one thing is certain: college costs are on the rise, so it's important to start early. The world is your oyster; take advantage of all it has to offer.

¹ This name is a pseudonym. Name similarities to any individual living or deceased are purely coincidental.

² Source: 2008 Global MBA Rankings, Financial Times

³ College-Bound Students' Interests in Study Abroad and Other International Learning Activities, CollegeBoard.com, January 2008

4 Assets must be used for qualified higher education expenses. However the pursuit of a degree is not a prerequisite for tax-free qualifying withdrawals. Transportation costs are not considered a qualified expense.

5 Search results as of August 15, 2008. Refer to Searching for Eligible Foreign Institutions in this article for search methodology.

Graeme H. Patey is a Financial Advisor with Smith Barney located in Cleveland, Ohio and may be reached at 216-523-3015 and/or graeme.patey@smithbarney.com.

Assets can accumulate and be withdrawn federally tax-free only if they are used to pay for qualified expenses. Earnings on non-qualified distributions will be subject to income tax and a 10% federal income tax penalty tax.

Please consider the investment objectives, risks, charges and expenses associated with municipal fund securities including 529 Plans before investing. The offering statement contains this and other important information. To obtain an offering statement, please call your Financial Advisor or visit www.smithbarney.com to locate a Financial Advisor in your area. Read the offering statement carefully before investing.

Investments are subject to market risk and may fluctuate in value.

Investors should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax benefit or other benefits that are only available for investments in such state's qualified tuition program.

Smith Barney does not provide tax or legal advice, and it is important to consult with a tax or legal advisor before investing.

© 2008 Citigroup Global Markets Inc. Member SIPC. Securities are offered through Citigroup Global Markets Inc. Smith Barney is a division and service mark of Citigroup Global Markets Inc. and its affiliates and is used and registered throughout the world. Citi and Citi with Arc Design are trademarks and service marks of Citigroup Inc. and its affiliates, and are used and registered throughout the world. Working WealthSM is a service mark of Citigroup Global Markets Inc. Citigroup Global Markets Inc. and Citibank are affiliated companies under the common control of Citigroup Inc.

INVESTMENT PRODUCTS: NOT FDIC INSURED • NOT GUARANTEED • MAY LOSE VALUE

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.

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