I'm very confused on 529 savings plans. Currently I'm dumping money per month into a plan for our Son ($50 per month).. I am assuming it is tax sheltered as long as money is used for schooling, etc..
But from what I've read, any income about 1 year before schooling would begin.. the parental income that is factored in is around 50%... and apparently 529 funds come into play, while the student portion is 47%, so if money is withdrawn before this time, it comes into play in terms of their income as well (hence many say to not withdraw till later on).
I've also seen current parents reporting that forms often do in fact ask for 529 information...
Is this true? Is there now way around the financial need impact..
Also.. if it is true.. is it just dollar for dollar.. so say you had $20k in a 529 would the financial need be decreased by just that amount.. if so I dont see what the big deal would be?
I may need to explore other avenues if it is more of an impact (ira's, life insurance dividends?).. Possibly cancelling the 529 or rolling it to another account..
Thanks for any input.