Major drawbacks of Section 529 plans are:
I) You must start early to derive significant benefits
II) They could result in a decrease in the amount of the financial aid
III) Once you join a plan, you cannot open an Educational IRA
The correct answer is:

Question

Major drawbacks of Section 529 plans are:
 I) You must start early to derive significant benefits
II) They could result in a decrease in the amount of the financial aid
III) Once you join a plan, you cannot open an Educational IRA
The correct answer is:

Quizplus · Accepted Answer

I and II are correct because starting early in a Section 529 plan allows for more significant growth potential due to compounding, and the assets in these plans can indeed affect financial aid eligibility. However, III is incorrect because having a Section 529 plan does not prevent someone from opening an Educational IRA (now known as a Coverdell Education Savings Account); both can be used for educational savings concurrently.

Major Drawbacks of Section 529 Plans Are