Is my rate of return guaranteed under a 529 plan?
Answer:
That depends on the type of 529 plan – a college savings plan or a prepaid tuition plan. Think of a college savings plan as an investment plan run by a state. The state or its agent invests your contributions in one of several pre-established investment portfolios. If the portfolio is age-based, the investments will be growth-oriented when the beneficiary is younger, and the state will shift money into more conservative investment vehicles as your child approaches college age. If the portfolio is not age-based, the types of investments (e.g., growth, balanced, conservative) will stay the same as the beneficiary grows older. Although you can potentially earn a higher rate of return with college savings plans, the rate of return is not guaranteed, and there's a chance you could lose money.
Prepaid tuition plans, though, generally guarantee you a minimum rate of return to ensure that you keep up with college inflation. In effect, you lock in tomorrow's tuition at today's prices. However, you'll generally be limited to the rate of return promised by your plan – you won't be entitled to any surplus.
GE 37711 (03/07)
If you are investing in a 529 plan outside of your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan.
529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal.
Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer's official statement. Please read the official statement carefully before investing.
Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Please consult your tax and legal advisors regarding your individual situation. Neither AXA Equitable nor any of the data provided by AXA Equitable or its content providers, such as Forefield, shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the AXA Equitable website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.
© Copyright 2007 Forefield Inc. All rights reserved.
