Building A Bridge

which allow tax- and penalty-free withdrawals for any reason at any time.

MANAGING A 529 PLAN
Whether you already invest in a 529 college savings plan or are still considering one, you have options to protect your funds and your children’s future. Arman Rousta, president and founder of New York City-based 401kid (www.401kid.com), an Internet-based software company that designs education financial planning products, suggests the following:

Consult an objective adviser. “You can’t really expect unbiased advice from financial advisers who work for 529 plan fund managers,” says Rousta. There is a software tool on the 401kid Website that gives very specific advice on which plans are best suited for any given family’s situation.

Diversify your 529 portfolio. Rousta reminds his clients who are parents that most 529 college savings plans offer an age-based option that automatically switches assets to more conservative securities as the child gets older and college draws closer. Age-based portfolios adjust risk based on the beneficiary’s age. The idea is to have more money invested in stocks in the early years when you have time to ride out market fluctuations, and then switch to more fixed-income vehicles in later years.

Roll money over to another plan. Because Walker felt comfortable investing in a 529 plan offered by her employer who serviced her other investments, and because she was not completely educated in terms of 529 plans, she accepted what was offered. She was unaware that she could have rolled her contributions over into the plan in Maryland where she lives, which offers a $2,500 state income tax advantage. Some plans assess a penalty for rolling over assets, Rousta notes.

Zimmerman stresses that 529 college savings plans will fail or succeed depending on their management team’s tenure, stock-picking acumen (ability to create a careful balance between risk and reward), and the price of the plan. Many plans are still in their infancy. Hurley says today’s 529 plans are much more flexible than the ones that were popular two years ago, and that parents can expect to see even more plan improvements in the future.

Though 529 plans may not be the be-all and end-all to saving for college, they still offer parents greater flexibility than having to bank solely on student aid and scholarships to satisfy their child’s yearning for higher learning.

529 College Savings Plan Resources

• The Best Way to Save for College: A Complete Guide to 529 Plans by Joseph F. Hurley (Bonacom Publications; $22.95)
• The 529 College Savings Plan: The Smart Way to Fund Higher Education by Richard A. Feigenbaum and David J. Morton (Sphinx Publications; $16.95)
• “Saving for Education: A Long-Term Investment, A Guide to Understanding 529 Plans” Investment Company Institute, www.ici.org/pdf/bro_529_plans.pdf
• “Smart Saving for College—Better Buy Degrees: 529 Plans and Other College Savings Options,” National Association of Securities Dealers, www.nasd.com/Investor/ choices/college/529_saving_printer.asp
• SmartMoney University’s College Planning, http:// university.smartmoney.com/Departments/CollegePlanning
• Morningstar’s College Savings Center www.morningstar.com/centers/529.html
• Kiplinger’s State College Savings Planswww.kiplinger.com/tools/managing/college/savings/ 2001/states01.html
• Savingforcollege.com.www.savingforcollege.com
• College Savings Bank www.collegesavings.com
• College Savings Plan Network www.collegesavings.org
• Tomorrow’s College Investment Plan www.enterprise529.com
• The College Board www.collegeboard.com