Have you opened that 529 plan account yet?
A while back, while discussing whether or not you need a financial advisor, I talked about how just knowing what to do isn’t always enough. As an example, I pointed out that just knowing you need a 529 plan for your college savings account, doesn’t mean that you are necessarily actually ready to just open a 529 account online or otherwise. There can be a lot of small decisions along the way that end up derailing the most determined person’s individual financial plan. Recently, I revisited this train of thought and figured, I could show step-by-step how to open 529 accounts online for the Colorado 529 plans as an example of exactly what it takes to actually implement those financial decisions you make after doing your online financial planning research.
529 Plan Colorado Example
If you have ever looked for this kind of step by step directions financial planning guide, you know they can be hard to come by. There are several reasons, but one of the main ones is that going through every possible exception can be very time consuming. Even covering the basics can turn into a big project when we are talking about the right things to do with your money.
Every one of the 50 states has at least one 529 plan offering. Many states offer multiple 529 plans. There are no 529 plan rules that require you to use your own state’s 529 plan. In fact, depending upon where you live, it might be better to use another state’s 529 plan accounts. Just these three little facts mean that creating a 529 plan guide for everyone would be a daunting task.
To make things usable, I’ve narrowed things down a bit. I’ll have links to other articles and personal finance blog posts that explain when certain decisions have been made. Read those to ensure that this guide is right for you, or to make adjustments to this 529 setup guide. The example here will be opening Colorado 529 plans. That may or may not be right for you, but you should be able to take the information in these directions and apply them to your best 529 plan.
In Colorado, the 529 program is called College Invest.
Open 529 Plan Online in Colorado
In order to open a 529 account online, you have to know where to go. A Google search can be a good start, but verify the information you find. Do not just go with the first search result you see, or you may be duped into paying for something you don’t want to be paying for, like the people who fall for the FAFSA online scam do. To open a Colorado 529 account online, you go to collegeinvest.org (Pay particular attention to the .org and not .com)
At the College Invest homepage there is a picture of a baby and a bunch of buttons for grandparents, parents, and so on. We mean business, so just skip right through and click the purple Enroll button up near the top of the screen.
Once you’ve clicked Enroll, we’re ready for Step 2 to open a Colorado 529 online. As you can see, the good folks at College Invest are making my point for me. Three simple steps, only they aren’t so simple. And, then there is all of that ominous looking fine print and disclosure at the bottom. It might as well say, “Abandon All Hope, Ye Who Enter Here,” if you haven’t done this before.
Fortunately, we are going to make the assumption that you want to open the kind of 529 plan that you open and manage by yourself without a financial professional, and that you want the kind where you invest your money in mutual funds. This is the “regular” 529 plan that everyone is talking about when you read a finance article telling you that you should open a 529 plan. In Colorado, that’s the Direct Portfolio College Savings Plan.
So, click Direct Portfolio on the side, or there in Step 3. Both links go to the same place.
On the next screen, you choose whether to enroll online or by mail. If you ask to be mailed a kit, you’ll get a big, colorful brochure. You won’t ever read it, or fill it out. Trust me, when I tell you that as a former financial advisor I know that the odds of anyone acting on something that they receive in the mail in a timely manner is slim to none. If you are the kind of person who always takes care of things like this right away, you might be different, but if you aren’t that person, don’t fool yourself into thinking that this time will be different. Click the button to enroll 529 online.
Enroll 529 College Savings Plan Online Colorado College Invest
On the enrollment screen you’ll see a list of stuff you are going to need. Don’t worry about this, we’ll cover it later. Just put in your name, address, email and phone number and click Continue. Don’t worry about the email address. I’ve had a Colorado 529 plan oepn before child was born, and I’ve never gotten any sort of spam. If you sign up for electronic statements or disclosures, this is the email address where they’ll send them. Otherwise, I just get confirmations of things I do online.
On the next screen, you’ll see your information pre-filled in. You are filling in your information here, not your child or future student. Unlike many other accounts, the 529 plan rules allow you to own and completely control the account, even if the account is for someone else. So, even though this is your son or daughter’s 529 college savings account, this is your information because you are the owner of this account, and you are the decision maker.
Near the bottom, you’ll notice a section called successor owner. To be blunt, this is who will be the new owner of the account if you die. This unlike an IRA beneficiary designation. This person doesn’t get the money, if you die, they get control of the account. If you are married with children, then your spouse’s name goes here. If not, then you probably want to put whoever will be the guardian of your children if you die. If you don’t have that set up, then a trusted friend or family member goes here.
Now, we get to who this account is for, the beneficiary. You may know beneficiary from other finance accounts as who gets the money if you die. In this case, beneficiary means who is the account for the benefit of. In other words, the kid who you are helping send to college goes here.
If you want to open a 529 before a child is born, you just put your name here. The owner of a 529 account (that’s you) can change the beneficiary of the account at any time, for any reason. So if you want to open a 529 plan for your unborn child, good for you. Just put your name there, and then change it to your newborn child’s name when you’re ready. There is no rush. You can literally change it the day before the student needs the money. (Well, probably not literally, there is likely some processing time involved.) You’ll just come back and do a Colorado 529 login to your account.
Next, click here to find out how to choose 529 plan investments for your college savings account.
Then after that, you’ll need to actually get money in the 529 account.