529 Savings For your Kids

[doc holiday13]

My child is 4 years old now. I'm a little behind the ball on saving for college or trade school. Depending on the state you live in, you might get a state level tax benefit. Seems pretty sweet considering it can be used for other than college things like K-12 tuition, tutoring, or even transferring it to your kids Roth IRA. I looked at them a few years ago but wasn't super disciplined enough to allocate the funding to start

 

[Kroach]

Indiana is a 20% state tax credit. Max of $1500. So put in $7500 get $1500 on state tax. Can contribute through different accounts for different kids or spouse.

My wife is currently going to college so put everything through a 529 then pull it right out to pay for that semester. No student loans and get the 20%.

Definitely encourage everyone to take advantage of programs like these to lessen the tax burden.

 

[doc holiday13]

My wife is currently going to college so put everything through a 529 then pull it right out to pay for that semester. No student loans and get the 20%.

Thats how its gonna roll for my step kids. They're in private school so they'll each get a 529 that I'll fund in the next couple months to pay for their fall tuition

 

[Pharmseller]

Take a hard look at investment channels for your 529. I started one 25 years ago for my son. I was less than impressed with the rate of return.

 

[MThuntrrr]

Vanguard offers one directly from their website technically through Nevada, but it functions just like any other vanguard account

 

[dr.mooseknuckles]

I have one for each of my children and they're doing well. Was behind a bit for the youngest but got a big chunk in it in December. We contribute to each one monthly and they've done well. My finance guy said we should stop for our oldest, but we don't want any of our kids relegated to a school in state. Sure they can apply for scholarships, etc. but neither my wife or I were forced to stay in state.

Though looking at tuition costs, current in state at Clemson is about what I paid for out of state tuition 20 years ago. Pretty nuts.

 

[ODB]

We have one for our kid. One thing is that others can also contribute to it, so grandma and grandpa can give school-focused money.

 

[BBarnett13]

I went with the CollegeAmerica 529 plan through Capital Group. It can be used anywhere throughout the U.S. and even works for apprenticeships.

 

[eamyrick]

Take a hard look at investment channels for your 529. I started one 25 years ago for my son. I was less than impressed with the rate of return.

I just picked the S&P index option for mine after a few years of poor performance in a target date. Plan is to switch over to a much more stable profile when they hit freshman or sophomore year in high school.

 

[omicron1792]

Vanguard offers one directly from their website technically through Nevada, but it functions just like any other vanguard account

I did that when I lived in state without the tax credit. When I moved back to Alabama I moved to an Alabama 529 to benefit from the state tax credit.

 

[TxLite]

I’ve started one for my kids and contribute money. Grandparents/great grandparents throw a little in there for birthdays and that helps as well. If they end up deciding to skip school I’ll just roll it into my retirement account

 

[wind gypsy]

I just picked the S&P index option for mine after a few years of poor performance in a target date. Plan is to switch over to a much more stable profile when they hit freshman or sophomore year in high school.

Damn, i'm going to have to look at the performance of mine now.. Hadn't really been following but they really should have grown over the last 3 years and I dont think it's performed all that well.

 

[5MilesBack]

We started them and Coverdell's each year our girls were born. Now last one is in college and the older two will be transferring the rest of theirs to their kids. Middle daughter will use some of hers for a Masters and then transfer the rest.

 

[timmymac24]

We did it for both our kids using Fidelity. The best thing is to get family members to buy in so the kids get cash for birthdays and Christmas instead of landfill junk and things they don't really want or won't use. We were happy with the end results saved both kids from having to go deep in student loan debt. The years fly by trust me and you will blink and be scratching checks for college bills.

 

[eamyrick]

Forgot to add that you can now convert 35k of unused funds to kids retirement fund if money isn’t needed for college.

 

[Thess87]

I choose to do an utma for my two instead of the 529. I didn’t like the idea of it being locked into education. My thinking was if I can cash flow future schooling then I can give them that to help start their life. Then if they by chance start up something and end up not in school it’s not locked up.

 

[sasquatch]

I choose to do an utma for my two instead of the 529. I didn’t like the idea of it being locked into education. My thinking was if I can cash flow future schooling then I can give them that to help start their life. Then if they by chance start up something and end up not in school it’s not locked up.

I’m with you there, however I’m also not a fan of UTMA accounts as I do not want a 18-21 year old automatically getting control of what may be a large sum of money

We chose to just open a brokerage in our names, and if/when they are ready we will transfer it to them. Too often people let the tax tail wag the dog.

Once they are of working age they will likely have essentially 0 income, so they can withdraw from a brokerage essentially tax free anyway within any reasonable amount of money.


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[jtg88]

I’m with you there, however I’m also not a fan of UTMA accounts as I do not want a 18-21 year old automatically getting control of what may be a large sum of money

We chose to just open a brokerage in our names, and if/when they are ready we will transfer it to them. Too often people let the tax tail wag the dog.

Once they are of working age they will likely have essentially 0 income, so they can withdraw from a brokerage essentially tax free anyway within any reasonable amount of money.


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This is the route we took as well. The tax savings were not significant enough to justify a large account that is locked into education funding, particularly since we have a boy. For all I know, he might decide to enter the workforce at 18 or he might make a 35 on his ACT and get a full ride to his college of choice. If that’s the case, we still have the freedom to use the funds as desired.

 

[Brock A]

I choose to do an utma for my two instead of the 529. I didn’t like the idea of it being locked into education. My thinking was if I can cash flow future schooling then I can give them that to help start their life. Then if they by chance start up something and end up not in school it’s not locked up.

Same, I have custodial accounts through Edward Jones for both my crib midgets.

 

[z987k]

I just picked the S&P index option for mine after a few years of poor performance in a target date. Plan is to switch over to a much more stable profile when they hit freshman or sophomore year in high school.

Target date funds exist to rip people off. They under perform and the fees are insane.