if one is contributing to the 529 for kids education and the kid does not go to school what happens?
same for those university pre-payment programs, i.e. u can pay fees at todays rates for your kids future education, what if the kid wanst todo soemthing that that uni does not offer. do u get a refund, how does that work, would it be the actual amount u had paid into it or the current cost etc
I thought i would check with y’all. someone asked me about it and i was not sure of the answer
There are some college funds which allow you to divert funds. I am not sure 100%, but this area is getting real attention. There are some nice products out there which are more flexible than a traditional 529. Check with your financial advisor or an Insurance agent.
yeah i will, this was an inquiry from someone who already has some money in 529. concern is that he is not a citizen, and if he has to go back there is no guarantee that his kid can come and study at this uni..visa etc..kid is not a US citizen either. so his money is sitting there but he dunn know. I may connect him wiht my fin-adv then, thanks.
btw, what other products are out there, if you dont mind me asking, u have kids..what options have interested you te most.
529 is basically for a traditional US family, who have no clue about investing and/or who know/hope their kids are going to college. These days its whatever it gets people to start putting money away for later.
Anyways, to anser ur question, 529 works almost like like IRA, its tax deferred and u get the pre-tax benefit and then u use the funds for the kids tuition (if they go to college) (i think u pay tax on it at that time, but there may be tax breaks for education expense) or u can withdraw money (and pay some fines).
Fraudia bhai: before you go any further, please explain to me in simple english what exactly this 529 is all about. dumb khanzada
shukria,
Khanzada… click here to read about 529 Plans
http://www.529educationplan.com
It has tax advantages when someone is saving and investing for their kids’ college education.
^ oh, woh jee meray abhi bachay nai hain na isi liay pata nahin tha 
Thaank you for improving my GK :k:
khanzada, what type of proghrams exist in Pakistan for retirement savings or education funds etc? I know u can set up private trusts like anywhere else,nbut are there any govt sponsored schemes?
Pakistan does have some tax incentives for approved retirement schemes.
The biggest employer is the government, which has pension schemes (60% of your last pay) and since those are defined benefit schemes, so they are pretty good for the retirees, but are major contributors to the government deficit.
Private companies do have benevolent and provident funds, which need to be approved by the tax authorities to get full benefit. I don't remember now exactly how that works, but you put away after-tax money in there, and you can take loans from that, or you get a pretty hefty lumpsum (with interest) at retirement. There are some companies who also offer annuities schemes.
There are hardly any tax deferred schemes for college education in Pak, primarily because (prior to LUMS etc), the higher education in universities within Pakistan would cost peanuts. With more people now trying to send their kids to foreign schools or expensive private schools in Pakistan, they are individually saving money for such expenses.
Fraudiay Bhai: Savings schemes as such are not being promoted/introduced at the government level (to my mind) apart from the employer pension/provident fund trusts that faisal mentioned.
private sector is coming up with schemes...actually its an off-shoot of the consumer credit hoopla here. Arif Habib Investments has launched specific mutual fund schemes with specific investment objectives like child education, marriage, retirement, aur kaafi kuch.
thora aage barh raha hai hamare yahan, par a lot still needs to be done. I am sure with the deepening of the financial markets that is taking place, we will sure see higher level of specialization and more focused products on the table in a short while.
Faisal these defined benefit retirement schemes, what are thje limits on these i.e. how many years do u have to be in service and how many years can u draw upon the benefits?
I am just assuming, knowing the corruption that many ppl are probably getting benefits even though they died years ago?
That is only true for government employees (or ex-employees). Most private companies have changed over to defined-contribution, and then the fund is independantly managed and audited separately.
For government employees, who are still under defined benefit retirement scheme, the interesting thing is that the surviving spouse (e.g. widow) is entitled to the exact same amount, which the employee him/herself was getting as pension. However if both die, then the pension will end. For this reason, the kids will often not inform the government about the death of the parents. And thus, periodically, the government requires the pensioners to appear before some clerk to verify that they are still alive.
The scheme has all kinds of different contribution rates depending upon the numbers of service and all that. It is for this reason, we use a term "super annuition" or something. Which means that after 25 years of service (even if you are not 60, which is the mandatory retirement age, or may be 65), if you retire, you get full pension benefits. Ofcourse, you will get 60% of your last pay. So if you serve till retirement age, your gross pay will presumably be higher and as a result higher pension.
The pension is adjusted for COLA every year, anyway.
seems like a fairly generous pension plan.
anyways, back to college savings issue..my bro in law also signed up to thus U-Promise thing, get 2% of your purchas price from sleect vendors applied to your kids education fund. I think everyone with kids should sign up for it.
kaleem mah man u have a triple whammy, how are u planning to finance college?