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529 Plans and Future Child Education
Posted on 11/12/15 at 1:56 pm
Posted on 11/12/15 at 1:56 pm
I figured the MT board would be as good a place as any to ask this question.
I live in Louisiana, and a few years ago, I opened a 529 College Savings Plan with Fidelity to start contributing small amounts each month to a future child's college fund. The money is being taken out of my paycheck after tax and this is not an LA sponsored plan (not really sure if that matters). I figured because the amount was negligible, I would revisit this when we were expecting a child.
Now that we are expecting our first child, is the best thing for me to do to keep using this plan? I'd like to make sure that I am getting the best deal, so I would be open to changing plans or moving this money to a different account. I also want to be able to give the future grandparents options if/when they want to contribute in the future. I anticipate this child and any/all of our children going to college and using this money for educational expenses, so I don't think the lack of liquidity in that regard would be an issue.
TIA
I live in Louisiana, and a few years ago, I opened a 529 College Savings Plan with Fidelity to start contributing small amounts each month to a future child's college fund. The money is being taken out of my paycheck after tax and this is not an LA sponsored plan (not really sure if that matters). I figured because the amount was negligible, I would revisit this when we were expecting a child.
Now that we are expecting our first child, is the best thing for me to do to keep using this plan? I'd like to make sure that I am getting the best deal, so I would be open to changing plans or moving this money to a different account. I also want to be able to give the future grandparents options if/when they want to contribute in the future. I anticipate this child and any/all of our children going to college and using this money for educational expenses, so I don't think the lack of liquidity in that regard would be an issue.
TIA
4
Posted on 11/12/15 at 2:04 pm to TigerRob20
I think the LA plan is pretty legit. A lot of folks on here recommend it but I'll let them speak for it. With using your states plan you'll get a state tax write off and I think there is some matching the state will give you too but don't hold me to that.
Posted on 11/12/15 at 2:14 pm to TigerRob20
LA's plan does a matching contribution at year end so anything else and you're passing up free month
it's based on income so don't expect a lot but it's something
plus state tax deduction
it's based on income so don't expect a lot but it's something
plus state tax deduction
Posted on 11/12/15 at 3:32 pm to yellowfin
The states budget problems have scared me away from using LA's 529 plan but that's just me
This post was edited on 11/12/15 at 3:33 pm
Posted on 11/12/15 at 3:33 pm to Kramer26
quote:
The states budget problems have scared me away from using LA's 529 plan
Any suggestions for something different?
Posted on 11/12/15 at 4:49 pm to Kramer26
You think they'll take your money?
That's a little tin foil hatish for me
Now they may look at 529 balances for financial aid but we wouldn't qualify either
That's a little tin foil hatish for me
Now they may look at 529 balances for financial aid but we wouldn't qualify either
Posted on 11/12/15 at 11:03 pm to TigerRob20
quote:
Now that we are expecting our first child,
quote:
a few years ago i opened a 529 College Savings Plan with Fidelity
How did you do that without a SSN for the kid?
Posted on 11/12/15 at 11:21 pm to Mr.Perfect
quote:
How did you do that without a SSN for the kid?
You can do it on the LA Start plan as well before the kid is born. I started each account in my name before the kid was born, and then after the SSN got assigned, just updated the account to show him/her as beneficiary. I actually called them (LA Start) and they walked me through it since I wanted to start the accounts early.
Posted on 11/13/15 at 6:51 am to TigerRob20
Anyone here familiar with these plans and have any advice? I have a 5 month old and am looking into starting an account before the end of the year. If I max it out every year there will be a substantial amount of money saved up. If I can use it on housing for him that won't be a problem but if he goes in state his tuition shouldn't be as much as the account would be valued at (well who knows how expensive college will be in 18 years).
Posted on 11/13/15 at 7:59 am to Tigerstudent08
Like YF said the state matches with what they call an earnings enhancement in March of every year. Most people are going to get 4% but based on income it can go as high as 20%. You get to choose from Vanguard funds...some not all.
I have 4 kids and have an account for each of them. I put more in the older kids accounts. If you are a LA resident you can get a state deduction of up to $2400 per child per year. What is cool is you can carry over the deduction if it's not all used in a previous year.
LINK
I have 4 kids and have an account for each of them. I put more in the older kids accounts. If you are a LA resident you can get a state deduction of up to $2400 per child per year. What is cool is you can carry over the deduction if it's not all used in a previous year.
LINK
Posted on 11/13/15 at 8:16 am to Boh
Well bless my little heart. I did not know that.
Posted on 11/13/15 at 9:02 am to lsufan1971
Thanks for the info. I am a LA resident. I guess I will start putting $2400 per year in there. I'm sure after 18 years that should pay for any college in the state even at current rate increases of 6% b
Posted on 11/13/15 at 12:49 pm to Tigerstudent08
quote:
I guess I will start putting $2400 per year in there. I'm sure after 18 years that should pay for any college in the state even at current rate increases of 6% b
That is $43,200. Would barely cover 4 years of tuition.
Posted on 11/13/15 at 12:52 pm to JamalSanders
quote:
JamalSanders
quote:
That is $43,200. Would barely cover 4 years of tuition
Failed math? The $43,200 is the amount he would contribute over the 18 years. You are completely ignoring compound interest and the states matching benefits percentage.
ETA
200/month for 18 years at 4% interest = $68361
200/month for 18 years at 6% interest = $85140
This post was edited on 11/13/15 at 12:57 pm
Posted on 11/13/15 at 12:56 pm to ThatsAFactJack
It's pretty close to a wash if COA keeps going at 6-7%.
Posted on 11/13/15 at 2:15 pm to ThatsAFactJack
quote:
Failed math? The $43,200 is the amount he would contribute over the 18 years. You are completely ignoring compound interest and the states matching benefits percentage.
No shite. The way he worded it it would easily cover. Even at your 6% return the $85,000 wouldn't cover all college expenses.
Posted on 11/13/15 at 3:07 pm to ThatsAFactJack
Thanks yea I thought that was implied, wasn't like I was putting into a checking account. Hopefully ~$75k is enough for LSU in state in 18 years and hopefully tops is still around. I wonder what you do if the kid gets a full scholarship and you have $75k in the account.
Posted on 11/13/15 at 3:13 pm to Tigerstudent08
Other qualified expenses or another kid
Posted on 11/13/15 at 3:34 pm to yellowfin
Oh okay great. Thanks
Posted on 11/13/15 at 3:42 pm to Boh
Can you enroll online for a future child, or do youhave to call in?
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