529 Plans - Are they worth the investment for Children?

I use the Louisiana 529 plan. It can be used outside the state or country as long as the college meets certain accreditations. You get "earning enhancements" at the end of each year in which the state matches a certain percentage of your contributions. The enhancement match ranges from 2%-14% depending on your taxable income.

Thanks for the info...I’ll probably go with the Louisiana 529.

I went with the aged based moderate growth for my 9 year old and growth for my 1 year old. It looks like since inception for those funds it’s averaged 7% a year. I haven’t really checked on the other available funds in a while so there may be something with better returns or lower fees being offered now

LA START 529 is one of the best in the country.

I do know that most of the mutual funds offered for LA Start 529 are vanguard mutual funds and some of the expense ratios are as low as .04%. Start K12 would be the prior to college account and LA Start is for college.

How does a 529 affect the probability of getting a grant/financial aid? I’ve heard stories where a student received a lower grant/aid total than what they would have received if there wasn’t a 529.

The 529 counts toward a parental asset at around 5% rate compared to if you held it in a personal brokerage account under the parent name they would attribute the value of 20% rate. I did a lot of this research when I opened a few accounts. Technically the 529 account is held in the parent name. So either way the feds will screw you just not as hard with the 529 when applying for federal aid.

I have an arbitrary amount of $200 per kid per month. I then plan to put some additional lump sums into the oldest’s account as it comes available. I hope that my oldest won’t need everything and i can snowball the unused portion down to the other kids.

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Just curious but what savings goal are you aiming for? I’ve been struggling on how much to save monthly or total

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My goal is $100k per kid. I also max out the amount which is deductible in Alabama ($10k per year).

I adjust my monthly contributions as returns come in and shift contribution amounts between kids. My hope is that I can get the 1st kid through college and get a better feel for cost and then get ahead on the next 2. In a perfect scenario, I could have excess in the 529 to pay for #3's private school tuition.

For reference, my kids are 10, 7 and 2.

No, I do about $600 total a month and then I give each of them about $1,000 in their 529 at Christmas.

$600 X 12 = $7,200 + ~$3k Xmas = $10k.

The deduction limit in AL is $10k total, not per kid.

The $600 is not evenly split because I didn't have enough to max out when we first had kids so my youngest has a head start on my oldest and I have to catch up the oldest. A good illustration on compounding interest and why you should start saving as early as possible.

$830 per kid per month would give you about $180k basis (no returns factored in). I couldn't afford that much nor would I want to spend that much on their college.