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How to Start a 529 Plan [Easy App Quick-Start]

Starting a 529 Plan can be easy after you find the one that fits your needs

Starting a 529 college savings account is crucial to starting your kids right but can be SO confusing!

In this video, I’ll show you exactly what I looked for comparing 529 plans. Then I’ll walk you step-by-step through setting up an account in less than five minutes.

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Making Saving for College as Easy as Possible

Nation, we’ve been talking about the importance of saving for college lately, those 529 plans, but I feel like I might have confused some of you.

We looked at comparing the best 529 plans last week but even on those five steps, trying to compare over 100 state plans can seem like an impossible task. Getting your kids started on a plan and getting those tax benefits is critical though so I don’t want you giving up or getting stuck in that comparison stage.

So I wanted to do this video to show you what I looked for when starting my son’s 529 plan. I’ll share a few examples of state plans and then do a step-by-step in getting started.

I want to thank UNest for sponsoring the video. UNest, is an SEC registered investment advisor, that helps you set up and manage your 529 plan. Open your account and UNest will help you pick the right investments depending on how long until you’ll be needing that money for expenses. You get an advisor-guided plan but without the fees you pay with the average advisor. UNest charges a flat-fee of $3 a month on accounts under $50,000 instead of a commission-rate that increases with your account. You’ll also pay about half the fund fees compared to the average advisor plan.

Get started saving for college with one of the most efficient advisor-guided 529 plans in the country, learn more about the UNest App.

How to Compare 529 Plans

Let’s look at a few state plans and I’ll show you what I’m looking at when comparing these then I’ll walk you through getting started with a 529 plan.

We’ve first got the ScholarShare529, that’s the 529 plan in California and this one is run by TIAA-CREF since 2011. The plan offers two types of funds by enrollment year, so that target-date idea, and 17 regular funds. The fees on each fund can get a little expensive, up to 0.53% expense ratio but they’ve also got some passive funds that charge around a tenth of a percent. There’s no tax benefit for California income taxes though so you definitely want to compare around if you live in the state.

Next we’ve got the NEST529 which is Nebraska’s state 529 plan managed by First National Bank of Omaha. I picked this one as an example because it’s one that offers residents a break on state income taxes, in this case a deduction of your 529 contribution off income up to $5,000 for each individual.

The plan offers age-based and regular funds through Vanguard, State Street and T Rowe Price so you get a lot of options. The problem was when I went to look for fees, I couldn’t find it anywhere on the website. In fact, after ten minutes, I had to find on another third-party 529 review website that plan fees are some of the highest in the country, as high as fifteen-hundred dollars over ten years on a $10,000 account.

So for Nebraska residents, this still might be a good deal if you’re getting that tax break but definitely an example of the need to watch those fees.

Finally before I walk you through how to set up a 529 account, let’s look at the Bright Directions plan managed by Union Bank & Trust and this is the one the UNest app runs on.

Illinois residents get up to a $10,000 deduction for each person on their state income taxes so a big potential saving there. The plan offers funds from dozens of providers including Vanguard and T Rowe Price. You get all the types of funds including age-based, target-date and individual funds. In a lot of these, you can even choose from an aggressive, moderate or conservative portfolio.

You’ve got passive funds as well as actively managed so the expense ratios are fairly low, from just a tenth of a percent up to half a percent per year.

Step-by-Step to Open a 529 Account

Now I want to walk you through how to open a 529 account and honestly, it’s super easy on the UNest app. It works through that Bright Directions program so you’ve got access to all the low-cost funds and an advisor to help you decide.

That’s really why I like the app. Besides built on a solid 529 plan, it’s that mix between a college savings account and a financial advisor but without the fees. You see, most advisor plans charge a sales fee of up to 5% and then fees on each fund and however much you have in the account. UNest’s flat-fee pricing and no sales commission means it’s one of the most cost-efficient advisor programs in the nation.

Opening an account takes less than a couple minutes and starts with your child’s name, your name and some basic information. You’ll need yours and your child’s social security number for confirmation.

A nice feature here is this sliding planner. You enter in your child’s age and how much you think you can save each month, then the app will estimate how much you’ll have in the account and you can use this slider to move around your monthly amount.

Get started saving for college with one of the most efficient advisor-guided 529 plans in the country, learn more about the UNest App.

You can sign the application digitally here and then take a picture of your check to link your bank account. That’s it, that’s all it takes to open a 529 account. You can always see your account balance and make a deposit. One feature I really like is the ability to get gifts into your 429 account from family and friends. Here, something important for those of us with two or more rugrats, the ability to open another 529 plan on the same app and fund both.

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