Whitehouse & Company CPA's
Does it make sense to cash in my prepaid tuition plan and contribute the money to a college savings plan instead?


It might. College savings plans offer some advantages over prepaid tuition plans--withdrawals can be used for expenses not allowed under a prepaid tuition plan, and funds in a college savings plan can be used at any accredited college in the country or abroad (compared to only in-state public colleges for prepaid tuition plans). In addition, the value of your account may increase greatly, depending on how well your investments do.

On the other hand, prepaid tuition plans provide a measure of security. In effect, they allow you to buy future tuition at today's prices.

Most prepaid tuition plans require that either the owner or the beneficiary be a resident of the state operating the plan. So if you move to another state, you may have to cash in the prepaid tuition plan. And if you do cash in the plan, you will receive only your contributions (and possibly a low rate of interest).

Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011