A recent Legg Mason study of seniors, defined as those 50 to 80 years old, found that almost half (47 percent) of the participants did not seek advice from a financial advisor regarding saving to help fund their grandchildren’s college education.
Only 27 percent of respondents consulted an advisor and just 20 percent said that their advisor suggested a 529 to them.
The study found that most of the respondents where unaware of the features and flexibility of these plans:
- 72 percent were not aware that 529 accounts can be invested in plans outside their home state.
- 82 percent were not aware that unused funds could be rolled over to fund their own continuing education.
- 76 percent were not aware 529 plans could be established for their own continuing education from the outset.
The most appealing features of the plans, according to respondents, included the ability to contribute on a tax-deferred basis and flexibility to use funds for a variety of college expenses.
Concern about impacting a grandchild’s aid eligibility was the biggest drawback for grandparents regarding use of these plans. This concern can be overcome by gifting the full contribution in the grandchild’s final year of college, says Legg Mason.
Research Now conducted the online survey of 1,006 respondents, aged 50-80, from Nov. 11-15. To participate, respondents needed household income greater than $50,000 and have grandchildren under age 19 or currently enrolled in a four-year college.