529 Plan, Tax Savings, and right half of the bell curve

Happy New Year (for some people) - I've long pointed out how we lucky members of the right (i.e., upper) half of America's IQ bell curve use our cleverness to exploit the left half. One grotesque example is the college expense tax break called the "529 Plan." It gives huge tax savings to people whose kids are going to college, but offers nothing to people who are trying to save in order to establish their kids in a trade.

Here in California, you can shelter up to $229,000 in a 529 account. You don't have to pay federal taxes on your earnings while they accumulate, and, starting today and running until at least 2010, you don't even have to pay taxes on earnings when you withdraw them to pay for college expenses for your child. Oh, you say your kid isn't the college-type, but you are saving money to buy him an 18-wheeler to drive when he gets out of the Marines, and you'd like to use a 529 plan? Sorry, but too bad. If you want the tax break, you should have had a smarter kid. Click here for an FAQ giving the unbelievable details. 1/1/02.