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Any advice on the college savings front?
Posted on 2/25/15 at 12:49 pm
Posted on 2/25/15 at 12:49 pm
First kid's a couple months old, and I would like to start saving for future college. I have no investment experience outside of putting 10% into a 401k that I set and forget. I've read about 529 plans, but I'm wondering if that's a good idea, knowing the money can only be used for education and nothing else. Thoughts?
8
Posted on 2/25/15 at 12:57 pm to EveryonesACoach
I put $100 in per month for both of my daughters in the LA START 529 plan.
Posted on 2/25/15 at 1:00 pm to EveryonesACoach
i started putting $100 a month into a 529 when my son was born.
When I ran the numbers with an 8% return, the account would total around $42K when he turns 18, with $21K being the money I put in.
It can be used for room and board and additional education expenses outside of tuition.
When I ran the numbers with an 8% return, the account would total around $42K when he turns 18, with $21K being the money I put in.
quote:
m wondering if that's a good idea, knowing the money can only be used for education and nothing else. Thoughts?
It can be used for room and board and additional education expenses outside of tuition.
Posted on 2/25/15 at 1:22 pm to EveryonesACoach
Louisiana has a very good 529 plan for residents.
Other options are Coverdall ESA, brokerage account, savings bonds, ugma account, roth ira, life insurance, savings account, cd's etc..
Other options are Coverdall ESA, brokerage account, savings bonds, ugma account, roth ira, life insurance, savings account, cd's etc..
Posted on 2/25/15 at 2:46 pm to Toula
quote:
It can be used for room and board and additional education expenses outside of tuition
I bring up the only used for education part because my parents, who had a mutual fund for each of their kids for college, didn't cash out the one for my younger sister as she entered college in 2009 due to the huge losses the whole market took. They helped pay with other sources, and now those funds have rebounded and they can use it for something else now.
Posted on 2/25/15 at 4:46 pm to EveryonesACoach
Other than Obama's threat, is there any downside to a 529?
Asking someone with experience pulling money out...
Asking someone with experience pulling money out...
Posted on 2/25/15 at 9:47 pm to EveryonesACoach
Not advice, but I have twin 5 year olds and my strategy is to live below my means maximizing my savings so I could retire when they graduate high school, but I'll work 4 more years to pay for college as the bills come in.
Posted on 3/11/15 at 3:32 pm to CajunAlum Tiger Fan
Since the La 529 plan is for residents only, can my parents (who live in La) open one on behalf of my child and then I just give them the money to contribute to it?
I know there are 529 plans for every state, but the La has done quite well.
I know there are 529 plans for every state, but the La has done quite well.
Posted on 3/12/15 at 9:54 pm to Htown Tiger
You can do that yes. They will get state tax deduction. Also, state matches upto 14% of contribution based on last years AGI. So, see if your parents or you have the lower AGI to get the higher match from the state. BTW, you don't have to live in La to open the account. There is just a state tax deduction if you live in La.
Posted on 3/13/15 at 6:12 am to EveryonesACoach
1. max your retirement savings: 401k and Roth IRA; this is a priority over college
2. 529 plan if you have money left
2. 529 plan if you have money left
Posted on 3/13/15 at 6:48 am to EveryonesACoach
Im not paying for a dime until they graduate.
Posted on 3/13/15 at 11:05 pm to EveryonesACoach
I would look at a few options- high cash value life insurance to earn a guaranteed tax efficient rate of return, la smart start savings vehicles, and you can in invest in(don't quote me on this), but the state of Montana or Wyoming for college funding and earn a guaranteed 7% on your money.
I personally like the high cash value account due the hybrid uses of college and once you use that capital you don't use it(see truth concepts videos on college funding/savings plans. That money continues growing and you can utilize that for future savings too...
I can reason those are better than traditional college esa's/529 plans..
I personally like the high cash value account due the hybrid uses of college and once you use that capital you don't use it(see truth concepts videos on college funding/savings plans. That money continues growing and you can utilize that for future savings too...
I can reason those are better than traditional college esa's/529 plans..
Posted on 3/14/15 at 6:28 am to STLhog
quote:
Asking someone with experience pulling money out...
This.
I have heard from multiple sources that pulling money out can be a hassle. You have to send multiple receipts to "prove" it's an education related expense. Tuition is easy to pay but anything else at the bookstore, computer, etc they treat you like you are stealing their money.
That is just hearsay though. I have no personal experience with it and someone could just be lazy and exaggerating it.
I did not do the 529 plan when my kids were young. I had no guarantee that my kids would go to college and I do not want limits on MY savings and investments. I used a vanguard indexing strategy and it has done very well. Even without the tax savings, I am still ahead of both 529's I considered at the time.
Posted on 3/14/15 at 7:41 am to SECdragonmaster
quote:My husband had Iowa 529s for both of his girls and never had to submit a receipt for withdrawing from the accounts. The IRS asked for documentation once and only because his former CPA had omitted some dividends from one of his investments on his return which triggered them inquiring about the 529 withdrawal.
I have heard from multiple sources that pulling money out can be a hassle. You have to send multiple receipts to "prove" it's an education related expense.
Posted on 3/14/15 at 7:50 am to EveryonesACoach
All the advice is good. However, the best way to pay for college is having great grades and letting scholarships, etc. pay for it. Therefore, start the learning and reading process early. Children actually are "set" (so to speak) how they learn and their "eagerness" to learn by age 3. - i said that clumsily but hopefully you know what I mean. I raised a litter of kids, get them to "think" out problems early in life and reward them when they think of solutions.
Posted on 3/14/15 at 8:32 am to jeffsdad
....and to a 2-3 year old, all solutions are correct as long as they think about it first.
Posted on 3/14/15 at 2:53 pm to makersmark1
quote:
retirement savings: 401k and Roth IRA; this is a priority over college
I definitely agree with the fact that you need to keep your retirement goals in your mind when deciding how much college savings can you handle.
I disagree with waiting until you are putting more than 2000 dollars a month into retirement accounts and then maybe put money in a college fund if there is anything left. With tuitions ballooning the way they are, if the bubble doesn't burst parents will need to give their kids substantial support for college or allow them to flounder in debt the first years when they are trying to get their careers started
Posted on 3/15/15 at 12:51 pm to TigerGrl73
quote:
My husband had Iowa 529s for both of his girls and never had to submit a receipt for withdrawing from the accounts. The IRS asked for documentation once and only because his former CPA had omitted some dividends from one of his investments on his return which triggered them inquiring about the 529 withdrawal.
Thanks. That is helpful information.
Like I said, I had no personal experience with a 529 withdrawal. Glad to know it's easy.
Posted on 3/15/15 at 1:37 pm to EveryonesACoach
I'm a big believer in 529 plans and have a few of them set up. I think the ones in LA are better now so you can get a state deduction if you use one from LA.
I have mine through VEST, based in VA.
I have mine through VEST, based in VA.
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