Reinvestment Plan And College

Steve wants to know if he should get out of his dividend reinvestment plans and move to a 529 for his kid's education.

QUESTION: Steve has a question about a dividend reinvestment plan. He has his children’s education money invested in two major companies. Should he move that to a 529?

ANSWER: You’re losing diversification, for one thing. You’ve bet the kids entire education on two companies. The other thing is that your plan is growing tax-deferred, not tax free. You’ll eventually pay taxes on it if you keep it like this. If you get involved in a 529, only get involved in one where you control the money the entire you have it.