About the Plan Itself:
* What type of 529 plan is it? There are two main types: state-sponsored and private. State-sponsored plans often offer residents tax benefits within their own state, but private plans may have broader investment options.
* What are the investment options? Plans offer a range of investment choices, from age-based portfolios (automatically adjust risk over time) to individual stock and bond funds. Consider your risk tolerance and time horizon. Are there low-cost index funds available?
* What are the fees? Look at expense ratios (annual fees charged as a percentage of assets), management fees, and any other charges. Lower fees mean more money for your child's education.
* Are there any minimum contribution requirements? Some plans may have minimum contribution amounts to open or maintain an account.
* What are the withdrawal rules? Understand the rules about withdrawing funds for qualified education expenses (tuition, fees, room and board, etc.) and the tax implications of non-qualified withdrawals. Penalties can apply.
* What is the plan's performance history? Review the past performance of the investment options offered, keeping in mind that past performance doesn't guarantee future results.
* Is there a state tax deduction or credit? Many states offer tax advantages for contributions to their state's 529 plan. This can significantly reduce your tax burden.
* What is the beneficiary change policy? Can you change the beneficiary if your child decides not to go to college or if circumstances change?
* How easy is it to manage the account online? Look for a plan with a user-friendly online portal for making contributions, tracking balances, and managing investments.
About Your Circumstances:
* How much can you afford to contribute regularly? Consistency is key to building a substantial college fund.
* What is your risk tolerance? Are you comfortable with investments that could fluctuate in value, or do you prefer more conservative options?
* What is your child's age? This will influence your investment strategy and time horizon.
* Do you have other college savings options? Consider any other savings accounts or investments you might use for college.
* What are your expectations for college costs? Estimate the cost of college based on current tuition and fees, anticipating inflation. This helps you determine a savings goal.
* What are the potential tax implications in your state? Understand the tax implications in *your specific* state of residency, both at the time of contribution and the time of withdrawal.
By thoroughly researching and considering these questions, you can choose a college savings plan that best aligns with your financial goals and your child's future. It's also wise to seek advice from a qualified financial advisor if you have any doubts or need personalized guidance.