Ever wondered who can open a 529 college savings plan and reap the benefits of tax-free growth for education costs? In this episode, Jessica and Brandon peel back the layers of this powerful tax advantaged savings tool. They dive into the recent changes that make 529 plans more flexible than ever, illustrating how they can be a game-changer for your family's educational funding—whether it's for a traditional college route or alternative educational paths, like vocational school.
Getting a head start on college savings isn't just a nice idea; it's a strategic move that can define your child's educational opportunities.
Tune in for a wealth of knowledge that could transform the way you approach saving for education.
If you’d like to leave us a question to be answered during future episodes, you can do so at Speakpipe.
You can email us at: thesugardaddypodcast@gmail.com
Be sure to connect with us on Instagram
Learn more about Brandon, and Oak City Financial
Schedule 30 minutes with Brandon
Please remember to subscribe, rate, and review.
Ever wondered who can open a 529 college savings plan and reap the benefits of tax-free growth for education costs? In this episode, Jessica and Brandon peel back the layers of this powerful tax advantaged savings tool. They dive into the recent changes that make 529 plans more flexible than ever, illustrating how they can be a game-changer for your family's educational funding—whether it's for a traditional college route or alternative educational paths, like vocational school.
Getting a head start on college savings isn't just a nice idea; it's a strategic move that can define your child's educational opportunities.
Tune in for a wealth of knowledge that could transform the way you approach saving for education.
If you’d like to leave us a question to be answered during future episodes, you can do so at Speakpipe.
You can email us at: thesugardaddypodcast@gmail.com
Be sure to connect with us on Instagram
Learn more about Brandon, and Oak City Financial
Schedule 30 minutes with Brandon
Please remember to subscribe, rate, and review.
The biggest benefit is that for most states you're putting money into the 529 plan. Now the money that you're putting in is already taxed. However, while the money is in the account growing, it's called tax deferred. So you're not paying taxes on the money while it's growing and then when you go to withdraw the funds to pay for qualified educational expenses, you are not taxed at all on any of the growth.
Speaker 2:Okay, welcome to the Sugar Daddy podcast. I'm Jessica.
Speaker 1:And I'm Brandon.
Speaker 2:And we're the Norwoods, a married millennial couple, here to help you build wealth so you can live the life you've always dreamed of. Brandon is an award-winning licensed financial planner with over 10 years of experience and millions of dollars managed for his clients all over the US. Don't worry, we leave all the intimidating finance mumbo-jumbo at the door. Stick with us as we demystify the realm of dollars. So it all makes sense. While giving you a glimpse into our relationship with money and each other, we are so glad you're here. Let's get started.
Speaker 1:Hey babe, what are we talking about today?
Speaker 2:Today we are talking about 529 plans, how they work. Who can open one? How much does it cost the tax benefits? We hear about 529 plans all the time. People talk about them on the internet and on social media, but we need to dig into the details today. So that's what we're going to be doing.
Speaker 1:Yeah, I would say 529 plans are really important for parents because one of the largest expenses that most people think of when they have kids is college expenses. Do you want to pay for your child to go to college? And I would say, with our generation being the first one that really had to deal with, you know, student loan debt a lot of us are of the mindset that, if we can, we want to help or either pay for entirely for our child to go to college so that they don't have to deal with the same student loan debt that we are currently, you know, all still trying to figure out how that's going to work out.
Speaker 2:Yeah, absolutely Well. And what's interesting is, I think when we first started talking about 529 plans just you and I you had very strong opinions about them, but it seems like over the last couple of years, things have actually changed with the 529 plans, making them actually a better product, if you will.
Speaker 1:Yeah, one of the biggest things that I think I had an issue with the 529 plans initially was is that if your child went to, if your child decided not to go to college or they got a scholarship, there was very limited options as far as what you could do with the money that you saved up. But there have definitely been some changes that make it a lot more flexible in those scenarios.
Speaker 2:But there have definitely been some changes that make it a lot more flexible in those scenarios, which is really good, because I think now you're much more positive about 529 plans and what they can do, so let's get into it. What is a 529 plan?
Speaker 1:Well, to kind of make it simple, a 529 is a tax advantage plan in order to save for college expenses. That is a basic, easy explanation of what it is.
Speaker 2:Okay, so an account to save for college, yes, but tax advantaged, tax advantage count to save for college.
Speaker 1:Yes, because there are advantages to saving for college expenses with a 529 plan that will save you as far as not having to pay taxes on the growth of the account.
Speaker 2:Okay, so that's the biggest benefit.
Speaker 1:Yes, the biggest benefit is that for most states you're putting money into the 529 plan. Now the money that you're putting in is already taxed. However, while the money is in the account growing, it's called tax deferred. So you're not paying taxes on the money while it's growing and then when you go to withdraw the funds to pay for qualified educational expenses, you are not taxed at all on any of the growth.
Speaker 2:Okay, when I don't want to get ahead of what else you wanted to say.
Speaker 1:Go ahead and ask what was the specific question. It was kind of flowing.
Speaker 2:Do I have to have a child to open a 529?
Speaker 1:You don't. As far as who can open, you don't have to have a child to open a 529 plan. Most of the time, when you're thinking of who's opening a 529 plan, it's normally going to be parents or grandparents. But however, for example, like you know, say for, let's say, hypothetically in our situation, your brother doesn't currently have any children. If you wanted to open up a 529 plan for our children, he can do that.
Speaker 2:Oh, but he could also open up a 529 for his potential future children that he wants.
Speaker 1:You cannot. Reason being is that the way that you open the account is that you are as an adult. You are, it's a custodial account, so it is the adult opening account for the beneficiary of the child.
Speaker 2:And if there's no beneficiary.
Speaker 1:You have to name a beneficiary.
Speaker 2:Okay, so we just answered that question. I'm glad I asked. I mean it makes sense. But you know, I just wanted to be clear because otherwise I mean people plan to have children all the time.
Speaker 1:No, it was a great question because I, honestly, had never been asked that question.
Speaker 2:Thank you. I'm full of great questions. Usually you try to get me for my questions, but here we are winning.
Speaker 1:So with the 529 plans, basically all 50 states plus a district of Columbia do offer state sponsored plans.
Speaker 2:District of Columbia is Washington DC.
Speaker 1:Yeah, dc.
Speaker 2:I feel like the only time you hear it like that is when you're watching the uh like beauty pageants and it's like District of Columbia and people are like where's that? You're like it's Washington DC.
Speaker 1:Well, to kind of make it clear, there are two kinds of 529 plans. You have on the education savings plan, which is the most common one as far as what normally what people are thinking of when they say 529 plan. But there also is what's called a prepaid tuition program. Now, for the sake of our conversation, we're going to stick with the education savings plan, because only about nine states offer the prepaid tuition plan.
Speaker 1:Okay, I think we had a caller about that one time and we addressed that in one of our Q&A episodes. Yeah, it was a caller asking about Florida. Florida is one of the nine states that do offer that.
Speaker 2:Okay, so we're going to focus on the education savings plan, because that's the most common use for the 529. All right, so how does it work?
Speaker 1:Well, you have the account holder, who is normally, like I said before, either the parent or grandparent, who opens the account, and then you start to contribute money to the plan and the money that you're contributing to the plan is invested within the account and, you know, based upon the growth of the account dictates, you know how much you actually have eventually to use towards college expenses okay.
Speaker 2:Do I have to put a certain amount in to open the account?
Speaker 1:you don't have a minimum, you don't, you don't have to put a certain amount in and you don't have to contribute on a regular basis okay, so I don't have to set up like a monthly draft or anything.
Speaker 2:No, so no obvious loopholes there's no obvious loopholes.
Speaker 1:It's you know you can. So I've had a variety of people. You know some people decide that they want to set it up and they have a large lump sum that they want to put in initially, or they set up, you know, a lower amount that's going in on a continuous basis, on a monthly basis, so it can vary depending on however you want to do it. So you could set up monthly contributions and then also, like you know, birthdays, holidays like Christmas or whatever you know you get some money from grandparents. You can contribute that as well.
Speaker 2:Okay. So yeah, that's. I mean that's a good way to think about it, right For birthdays and Christmas. Instead of doing toys or things, you could contribute to the 529.
Speaker 1:Yeah, because you know how, with Jess and I, we're really big on the investment aspect for our kids and having an account set up for them so that they're in a much better place when they become adults. And we have, you know, we let the grandparents know like, hey, you can contribute to their investment account. And also, the nice thing is, with most 529 plans, they actually offer a little link that you can actually send out to people and they can click on the link and contribute.
Speaker 2:Oh, that is very nice. Yeah, okay, what is it invested in? Or how is it growing over time? Is it like our Roth IRA? Is it like a 401k? What is it? How does?
Speaker 1:it work. I would say it's very similar to that, as far as you know the broad idea of that. So most of the time you're invested in, either you know, mutual funds or ETFs, and I would say the most common way that people invest with NA529 plan is what's called a target date fund. Now, you might be familiar with that term because target date funds are used in retirement plans as well. So the way that the target date fund works for a 529 plan is that it is based upon the approximate age, that approximate year, that your child would be entering college. So what happens is is that while the child is younger, it starts out more aggressive and as you get closer and closer to that target date of when they would be entering college, it becomes more and more conservative with the idea that you want to preserve the principal and the growth that you've had on the account, because now it's about to be time for you to use the account.
Speaker 2:Is this one of those situations where time in is always better. Time in is always better. So, even if you're contributing lesser dollar amounts, the longer time period that you do, that you know. Maybe you open the 529, the year that the child is born and then you contribute for 18 years $25 a month or $20 a month, you know, or whatever that might be for you versus, hey, I'm starting my kids 15 and now I have three years to grow this account. I mean, is that the same premise of the earlier the better?
Speaker 1:Oh, 100% Whenever you're investing, especially when it comes to the longterm, the longer the better.
Speaker 2:Okay.
Speaker 1:You know. So, even if you're putting in those you know small amount, because I think one of the things that a lot of people get hung up on is should I contribute to my, should I open a 529 plan and what is the amount that I should contribute? And I always say that you know, you do obviously need to focus on one are your finances, in order to take care of what you need to today, because the one thing that you can't borrow for you can borrow for college in the future, you know, but you can't borrow for your retirement or the expense that you have today. So, even if it's just $25, $20, whatever it may be, something is always better than nothing when it comes to saving and investing. So, you know, I've, like I said, I've heard people say that I want to wait until I can contribute 200 or whatever. I'm like. If you can contribute a hundred, 50, 25, that's better than waiting.
Speaker 2:So, like you said, more time in the market is going to be more beneficial because you have a lot more time for the account to grow. Are we seeing the same type of growth, like the 7% to 10% historically that we talk about for market type accounts?
Speaker 1:Well, I always like to keep it in context. When we talk about this growth, when you hear people talking about, on average, the 7% to 10%, that is when you're like 100% equity, okay, all right. So normally the 529 plan, depending on how old your child is, is going to dictate what that asset allocation is, and what I mean by that is how aggressive and how conservative your investments are within that account. Because, for example, if your child's 12 and you're starting a 529 plan now which it's better than not starting one at all If they're 12 and you started one and you have six years now before they're going to be in college, it's going to be less aggressive than, say, if you opened up that 529 plan when that child was one aggressive than say if you opened up that 529 plan when that child was one.
Speaker 2:But that target date fund designation is going to determine, yes, the risk or the, the uh, how conservative or how.
Speaker 1:Aggressive.
Speaker 2:Aggressive.
Speaker 1:Correct it's like what's the opposite of conservative, apparently aggressive, yeah, so when you set it up, you know, like when the first thing they ask you is obviously the age of the child, because then they're dictating basically that they're assuming the child's going to go to college when they're 18.
Speaker 2:Okay.
Speaker 1:So you know it's going to give you the asset allocation off the targeted fund, that's appropriate for the age of the child upon when you open it.
Speaker 2:That makes sense. So you mentioned earlier it's done by state what happens if you open one. You know we live in North Carolina, we open one in North Carolina and then we move to South Carolina.
Speaker 1:What happens? Well, the nice thing is is that you can open a 529 plan in any state. It doesn't have to be the state that you live in.
Speaker 2:Okay.
Speaker 1:Okay. Is it the state where the no, you're not guessing where somebody's going to college in 18 years, okay, so some states do offer benefits for their residents to open a 529 plan, Some so for the most part, a lot of states don't give you a state tax deduction on your contributions. So what I mean by that is that the money that you contribute to your 529 plan is still going to be taxed in most states, but some states allow it to not be taxed. They give you a tax deduction on it.
Speaker 2:So does that mean, you should do your research?
Speaker 1:Yes, always do your research To see well, because I Clicking everything in finance See if your state has. So all right. So when you're looking into opening a 529 plan, first you want to look in your residence state. You want to see hey, are there any benefits that I can get with the 529 plan in my state that I wouldn't be able to get elsewhere since I'm a resident here? Okay, All right.
Speaker 1:So I'm going to use North Carolina as an example. North Carolina doesn't have any additional benefits at this moment in time for state residents Shocker, all right. Now, if your state doesn't have any additional benefits, then you can open up your search to other states, and some of the things that you maybe want to look into when you're looking at other states is one is there an annual maintenance fee on the 529 plan itself? And if there is, how much is it? Because that's a fee, the fee you have to pay on an annual basis. All right. Also, the investment options that you have available to you in the 529 plan.
Speaker 1:Now, for the most part, I would say that they're very similar. However, the difference that you could see is the cost, because if you've been listening to our podcast for a while, you know that even when you're investing in mutual funds or ETFs exchange traded funds there is always going to be a fee associated with participating in that fund. It's not something you can escape, but, however, the amount of that fee does vary. So, looking at different 529 plans in different states and you look at the investment options and you see what's called the expense ratio the fee that's associated with being part with investing in that fund can vary, and that's one of the things that I use when I'm looking at 529 plans for my clients, because the idea is that you want to obviously look for funds that are going to provide the best growth possible, but you also want to keep in mind the fees that are going to eat into that growth.
Speaker 2:Yeah Well, you know I don't really love that this varies by state right. This is I didn't know that and that I think is really bizarre. And also it's weird that I can then do the research and open an account in a state that I don't reside in to get their benefits. That's really interesting.
Speaker 1:Well, what it is. Is that really? The only main benefit that comes with being like some 529 plans in the resident state is that the contributions are tax deductible statewide.
Speaker 2:Right, yeah, but then that's a benefit yeah so that's a benefit.
Speaker 1:So like, if you were in that state you'd want to use, if you were in a state that had that option available to you, you'd want to use your 529 plan more than likely. But, like I said, north Carolina used to have that but they don't anymore. So, like you know, for me one of the things, one of the states that I often use is Virginia's 529 plan. Because they have good performance on their funds and they also are low cost.
Speaker 2:I was going to say is this something that you do often for your clients, or? And? Or is this something that people can do on their own? Although it sounds like if you're going to do it right, there's definitely some research that needs to be done.
Speaker 1:I would say just like almost anything in in finance, you could DIY it, you could DIY it, but you? But I would recommend doing your research and understanding what it is you're looking at. Now, as far as a 529 plan, you can open one directly yourself, through your state, or you can go through a financial advisor or a broker to open one for you as well. Now, the one thing that I would keep in mind for individuals is that if you're going through a financial advisor or a broker, I would make sure that you ask them what is the fee that they're charging to open it, because, technically, what normally happens is that it may fall under assets under management and you may be paying an assets under management fee.
Speaker 2:Okay, how do you do it?
Speaker 1:I don't do that. I walk my clients through opening one directly through the state because that's for me it's more of a moral thing. I don't want to get paid One, honestly, as a financial advisor, setting a 529 plan is very simple. It's not a complicated thing, it's not something that requires a ton of my time. So I'm OK not quote unquote getting paid for doing that specifically and for me it's just a morality thing, like I just feel.
Speaker 1:I don't know, I feel weird about charging on that when it's for education purposes. That just may be a me thing I've never really talked about it with other advisors but for me, since it's such an easy process to do, even though it's a very important one, it's a very easy process for me to do and I get paid other ways for me to do and I get paid other ways and I was fortunate enough that my mom paid for my college education and I guess maybe a part of me is kind of like this is like my way of paying it forward outside of like obviously, taking care of our own kids' college education.
Speaker 2:Yeah, Do you remember this is funny and I'm only saying this because my dad is literally in the other room but do you remember when he was here visiting last time and we were talking about, I think, 529s and caught like paying for college? And he was like, yeah, well, we paid off your college? And I was like in what world? Like, uh, no, sir, you did not. And it was the funniest thing because, look, I'm like over here looking at him now because he like had this total I don't know lapse of mind where he was like, yeah, we paid for your college. And I was like, uh, no, you didn't, because guess, who's still paying on these loans. But he clearly convinced himself that he did, which was hilarious. And I was like, well, if you'd like to write me a check, I will gladly accept it.
Speaker 2:But yeah, that was just a sidebar.
Speaker 1:Yeah, I was accept it, but yeah, that was just a sidebar. Yeah, I was fortunate. I was fortunate that my mom paid for my college education, which made it significantly easier for me because I don't have any student loan debt.
Speaker 2:Yeah Well, and I vividly remember not to go off too much on a tangent, but I vividly remember having the conversation about, like, do I live on campus, do I not live on campus?
Speaker 2:And I actually deferred my acceptance by a year so that I could bring my car, because freshmen weren't allowed to bring their cars and or park them on campus.
Speaker 2:And if you're familiar with Charleston, parking is limited and it's super, super expensive to park anywhere in Charleston, let alone to have a designated spot.
Speaker 2:And so my parents, especially my dad, were very much of the mindset of you're in college so that you can come out of college, have a career and if you want to buy a house or if you want to get a nice apartment or whatever, that's what you're going to college for. So no, you will not be living in some you know house in downtown Charleston or some fun apartment complex on James Island or you know, like my friends were doing they did. You know I don't want to be dismissive of how much my parents have done for me in my lifetime and I did have a monthly allowance from them that they, you know, helped me cover my basic expenses and foods and things like that. But it's just it's just so interesting because you have your very strong perspective on student loans and paying for college, et cetera. And then I have mine and I think over the years my mindset has changed about you know what we're going to do or would like to do, or how we would like to contribute.
Speaker 1:Usually I'm 100% changed.
Speaker 2:Yeah.
Speaker 1:Because when we first started dating and talking about all these things, you were like, oh, they could pay for their own college.
Speaker 2:Yeah, and which is funny because I'm not that person that's like, well, I had hardships, so I want my kids to have hardships Right. Like that's not how I am at all. But I also think that there's something to be said for understanding the value of education. You said, for understanding the value of education. And you know, even if it's one of those situations where it's hey, you take out these loans so that you are serious about school and you know you're going to have to pay these back, and of course we would do a lot of education for it We've also talked about when the time comes, we take out the loans, help them establish credit right and then pay them off when they graduate.
Speaker 2:I mean, there's different reasons to potentially take on the loan without any penalties and then paying them off on time and teaching that responsibility. Or hey, you want to go to college and party and you don't want to take the responsibility to go to class and do what you need to, then these loans will be paid by you. You do what you need to and these loans will be paid by you. You do what you need to and these loans will be paid by us. So you know, we we have time, um, to figure out what that's going to look like, but I definitely have changed my mindset of you know, if they don't have to have or carry the debt, then why should we put that on them?
Speaker 1:I don't. I think how you think about it is also really based on your experience. You know, growing up yeah.
Speaker 1:You know, for me, my mom was my mom was a college professor, so you know education was extremely important to her, obviously. I mean my mom had her PhD by 26. And you know, for me, growing up I there was never a question of me going to college. It was never like a second thought. I always knew I was going to go. My brother and I always knew we were going to go to college and we were extremely privileged in that manner and I realized I was extremely privileged to have college paid for, because that is the reality for most people is that that's not going to happen.
Speaker 2:Right. But I think, too, we talk about you know what is college even going to look like in you know, 12 years when our oldest potentially goes, years when our oldest potentially goes. Also, we now know that there's careers out there that don't even exist right now, let alone plenty of careers where you can have a great income, great life, great reward for what you're doing, and you don't need a college degree. So I think that there's more to life than you have to go to college. I mean, I'm technically not using any of the degrees that I have. I do think that they helped me, you know, in certain aspects and I do feel like there's some transferable skills from those degrees in my first career in education, for sure, career and education, for sure. But I also don't want to just send our kids to college, to send them to college to say that they're in college, if that's not going to be their path.
Speaker 1:Also with you saying that you know we've been speaking about 529s in relationship to college expenses, but they expand further than that.
Speaker 2:Oh yeah, let's talk about that.
Speaker 1:Because you can use up to $10,000 a year for K-12 education.
Speaker 2:So, for example, if your child goes Like private school Right.
Speaker 1:If your child goes to like a private school and it's K-12, you can use up to $10,000 per year from a 529 plan to pay for those expenses.
Speaker 2:What else is on that list, like tutoring or meal plans when you do get to college?
Speaker 1:Well, yeah. So first also, I want also, you know, point out that you can use them for apprenticeship programs and vocational schools. As we were talking about before.
Speaker 2:You know not, college isn't for everyone Right and it's not needed for everyone, depending on what you want to do with your life. A hundred percent Not everybody needs to go to college so you can use it.
Speaker 1:for you know, like I said, the vocational and apprenticeship programs which, as of right now, a lot of the vocational occupations are extremely underserved and you have these occupations where people might not think about it, but you go into them right away. Make it six figures.
Speaker 2:Right, yeah, you have to go and learn those skills and then you can have a lucrative career. Absolutely.
Speaker 1:Yeah, as far as like some of the things that it covers, you know, think about the traditional things that come along with school. So, like college, you know the tuition, whether it be college tuition or K through 12 tuition for a private school room and board at a college that's good. Even you know computers, books, you know. I don't know how much people use books in college anymore. I feel like they should just be on their computer. Internet, some of that nature, anything. A lot of those are associated with education.
Speaker 2:What about and I know this this came up on one of our episodes when we were talking to to Beth and Ben about predatory lending, and it's like you need a car to get to college to get that class not a covered expense. Ok, just wanted to be really clear on that. You know, don't try to find the crazy.
Speaker 1:Now, like I said, you can go on to the IRS website and it can break down in further detail the qualified expenses. If you have any questions, yeah, I think that's fantastic.
Speaker 2:What happens, you know? Let's say, our daughter has a 529 plan. She ends up not using it. Then what Like?
Speaker 1:what can we do? So there are a few options you have there. One is that it can be transferable in the sense that you can change the beneficiary on the account. So you know, in our scenario we have two children, our daughter being the older one. If she gets scholarship money or decides that she doesn't want to go to college, we can transfer it to our son.
Speaker 2:Oh, is there any kind of time limit or restriction? Like literally from Monday to Tuesday? We can transfer it to our son. Oh, is there any kind of time limit or restriction? Like literally from Monday to Tuesday? We can choose Roman over Aston.
Speaker 1:We can change the beneficiary.
Speaker 2:Oh, that's so interesting. Okay, and are there any other stipulations about that?
Speaker 1:Well, there are some other options as well, too, so they've recently made a few changes where you actually can use the student loan I'm sorry, the 529 plan to pay off up to $10,000 worth of student loan debt.
Speaker 2:Is that a year or just one time? Just one time, okay. Well, most people have more than $10,000, but that's good, okay.
Speaker 1:I'll take it. You can use it for the beneficiary or like a sibling, so like, if you know, asin didn't need hers and Roman did and he still has some student loan debt. You can use $10,000.
Speaker 2:Okay, I'll take it. That's better than what it was.
Speaker 1:It's better than nothing, because this is recent changes. Now, the one that I think is most beneficial is that you can roll over up to $35,000 worth of unused funds from a 529 plan to a Roth IRA for the child.
Speaker 2:Oh, why is that huge? Can you tell us?
Speaker 1:Well, it's huge because prior to this, you know the main way that you were going to be able to access those funds like, let's just say, hypothetically, your child decided not to go to college right, you were more than, you only have one child and you didn't have anyone to transfer the. As of that, you were going to be able to access those funds like, let's just say, hypothetically, your child decided not to go to college, all right, you were more than, and you only had one child and you didn't have anyone to transfer the plan to. As a new beneficiary, you more than likely were going to have to take a 10% penalty on withdrawing the money, even though you were doing and I didn't like that because you were being proactive, trying to plan, and just things in life changed which required you to change the plan, and now you're going to be penalized for being proactive and I didn't like that part.
Speaker 2:That makes sense Okay.
Speaker 1:Because, like I said, nowadays, like I said, there's so many different occupations that, more than likely, the occupation that our children are going to have doesn't exist today. So, you know, if they were saving for college because we think that's, you know, a good option for them, but if it's not, then I don't want to be penalized for it and so this allows you to find another avenue to transfer the money over to your kids. That's going to be beneficial to them in the long run.
Speaker 2:I like that. What happens? I'm just again spitballing some questions at you here. Are the 529 plans only in this event for children? In this event for children, or, for example, if we had a 529 plan, one of our children decides not to go to college. Now the money's sitting there and I had been thinking about going back to school. Could I use the funds you could Now? Can I so? Could I have opened, or could I open technically a 529 plan for myself or for you as well, like right now?
Speaker 2:You could open one for me technically, but not for myself.
Speaker 1:Honestly, I have to look on the details on that, to be honest with you, because if I open one for you and then transfer it to me, I'd have to do a follow up on that one. I don't know the answer, to be honest.
Speaker 2:Stay tuned.
Speaker 1:I've never had that question asked.
Speaker 2:Well, because I think we all assume it's for our children. Right Again, it's parents opening the account or grandparents. But if there are benefits and we are thinking about we as adults going back to school or getting some vocational training or something of the sort, could we also benefit? Is really the question.
Speaker 1:Yeah, I know that you can like say you opened it intentionally for your child initially but your child ended up not using it. You could use it for yourself, but I don't know about as far as initially opening the account for yourself.
Speaker 2:Okay, well, we can look into it.
Speaker 1:Yeah, I'm sure most people I believe that you can, but I don't want to state that without verifying.
Speaker 2:Right Going back to having potentially a broker or a financial advisor like yourself. Open up the 529 to make sure everything's set up correctly. If somebody is not a full planning client of yours is opening a 529 plan and all a cart service that you offer it isn't currently an a la carte service but, as I said before, it's not one of the things I like charging for.
Speaker 1:I like, I said, like I haven't.
Speaker 2:Apparently, brandon doesn't like making money.
Speaker 1:You guys, I haven't talked to any other advisor about this, so this is literally just me in my own head, but I've only ever opened plans for planning clients.
Speaker 2:Okay, well, I think it's something to consider because, again, people want help in different areas and they might not be ready to be a full planning client and you are still giving your time and expertise.
Speaker 1:Yes, it is an all-across service that I do offer and it's a one-time fee as compared to if you with some, with a lot of financial advisors, if you're opening a 529 plan, if they're opening it up for you, it's an ongoing fee because it's going to be counted as basically the asset center management, which is a fee charged annually. Right, so you don't do that Mine's a significantly smaller one-time fee.
Speaker 2:Yeah, okay, a 529 plan with the information that you now have about varying from state to state and having different benefits in different states. You know, again, research is being done. You're doing it regularly anyway. So if you had been considering opening up one, you can still reach out to Brandon and it's something he can help you with.
Speaker 1:Yeah, and you can access that on our on my website, which you can access via, you know, the sugar daddy podcastcom or Oak city financialus.
Speaker 2:Yeah, awesome. All right, did we miss anything about the five 29s, or does that cover it?
Speaker 1:Um, I think that's pretty much it, you know for the most part as far as a high level view of it, but I always say, like I always want to preface for people, though you know you need, you need to honestly you, a lot of us want to do better for our children. However, you do need to make sure, as the adult, that your finances are in order. So, as always we stated earlier, you can't borrow for retirement, but you still can borrow for college. So don't sacrifice, you know, making sure that your retirement is set up or your work optional plan is set up, you pay for your child's college instead.
Speaker 2:I think that's a great final thought. Hopefully this was helpful and if you need help getting a 529 plan opened, you can reach out to Brandon. Don't forget to leave us a rating and a review and share this episode with a friend if it was helpful to you. Thanks so much. Don't forget Benjamin Franklin said an investment in knowledge pays the best interest. You just got paid. Until next time. Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review and share this episode with your friends, family and extended network. Don't forget to connect with us on social media. At TheSugarDaddyPodcast, you can also email us your questions you want us to answer for our Pass the Sugar segments at TheSugarDaddyPodcast at gmailcom, or leave us a voicemail through our Instagram.
Speaker 3:Our content is intended to be used, and must be used, for informational purposes only. It is very important to do your own analysis before making any investment based upon your own personal circumstances. You should take independent financial advice from a licensed professional in connection with, or independently research and verify any information you find in our podcast and wish to rely upon, whether for the purpose of making an investment decision or otherwise.