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Coverdell vs 529 differences???
Posted on 3/20/15 at 9:45 am
Posted on 3/20/15 at 9:45 am
Can someone give me the general differences between these two types of education savings plans? All I know is that the 529 is for college only and the coverdell is for any education.
Are they pre or post tax? Other considerations?
My kids will be going to catholic school and I'd like to have some cushion for their high school years which is why I'm leaning towards coverdell. But I don't want to tie myself into any plan that could go unused and incure a fee to withdraw. This concern applies to both.
Are they pre or post tax? Other considerations?
My kids will be going to catholic school and I'd like to have some cushion for their high school years which is why I'm leaning towards coverdell. But I don't want to tie myself into any plan that could go unused and incure a fee to withdraw. This concern applies to both.
3
Posted on 3/20/15 at 9:47 am to poochie
Believe Coverdell has a $2,000/yr max contribution. That's one difference.
This post was edited on 3/20/15 at 9:48 am
Posted on 3/20/15 at 9:48 am to raw dog
What is the 529 max?
Posted on 3/20/15 at 11:00 am to poochie
Contributions to a 529 just cannot exceed the amount necessary to pay for the expenses for the beneficiary. You also could start dipping in to your lifetime gift allowance if you exceed $14,000 in one year. So basically it is highly unlikely that you would ever be confined to those limits.
Posted on 3/20/15 at 11:20 pm to poochie
I can't remember the exact wording of how the max is calculated but it was something like $325,000 when I checked a couple of years ago. In theory you could fund it in a single contribution but only get state tax deduction for $4,800 MFJ return, lol. The state however would match 2-14% of the total contribution based on your AGI from last years tax return.
Posted on 3/21/15 at 11:43 am to jondavid11
The max is 5x the projected cost of one year at a state university. The formula is more specific but i believe that's roughly it.
Posted on 3/21/15 at 1:37 pm to wasteland
Ok, I thought it might be something similar to the coverdell.
Maybe the answer to what I want to do is a standard mutual fund for pre-college and a 529 for college.
Maybe the answer to what I want to do is a standard mutual fund for pre-college and a 529 for college.
Posted on 3/21/15 at 7:43 pm to poochie
look into LA Start
it's a 529 but has a 2-14% match depending on your income, and it also allows a state tax deduction. has to be used for qualified higher education expenses at accredited colleges (anywhere) or 10% penalty on growth applies. don't overfund. but it'll be useful if kid goes to college.
it's a 529 but has a 2-14% match depending on your income, and it also allows a state tax deduction. has to be used for qualified higher education expenses at accredited colleges (anywhere) or 10% penalty on growth applies. don't overfund. but it'll be useful if kid goes to college.
Posted on 3/21/15 at 11:00 pm to DanglingFury
My son will begin medical school @ LSU New Orleans in May. He has approx $20,000 available for tuition and other related expenses and is a Louisiana resident. Can he open a LA Start plan as owner and beneficiary with primary purpose of receiving state match? His AGI is negligible.
Posted on 3/22/15 at 10:39 am to OakAgedandIceballs
I don't know. give them a call. i don't see why not, but you should check on it first.
Posted on 3/22/15 at 11:02 am to OakAgedandIceballs
quote:
His AGI is negligible.
So is the state match
Posted on 3/22/15 at 12:43 pm to DanglingFury
Thanks!
Posted on 3/22/15 at 12:46 pm to yellowfin
At this stage in his life it's more about teaching him.... And 14% match is far from negligible to him
Posted on 3/23/15 at 9:26 am to OakAgedandIceballs
Looking at the 529, the benefits for me are negligible.
What about a custodial account? Pros/cons?
What about a custodial account? Pros/cons?
Posted on 3/23/15 at 12:29 pm to OakAgedandIceballs
quote:
My son will begin medical school @ LSU New Orleans in May. He has approx $20,000 available for tuition and other related expenses and is a Louisiana resident. Can he open a LA Start plan as owner and beneficiary with primary purpose of receiving state match? His AGI is negligible.
Yes he can. Could get an immediate 14% match from state.
Posted on 3/23/15 at 8:58 pm to poochie
quote:
What about a custodial account? Pros/cons?
like an UTMA/UGMA? can be used for anything, not just education. no tax deduction. not tax deferred. subject to kiddie tax exemption. turned over to kid's name at age of majority (18 in LA).
Posted on 3/24/15 at 2:25 pm to poochie
I did the Coverdale option cause I can pick my own stocks/funds to invest in one trade. The limit per year is $2k (I think) so it can't be the whole tuition savings plan for us.
One thing to consider especially with custodial accounts is that the funds in there count towards the child's net worth. This matters when applying for various programs. Need based and other college programs will count those funds.
In a Coverdale acct the funds count as the parents money.
One thing to consider especially with custodial accounts is that the funds in there count towards the child's net worth. This matters when applying for various programs. Need based and other college programs will count those funds.
In a Coverdale acct the funds count as the parents money.
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