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What would be the best account to open to save for your kid(s)?
Posted on 1/23/23 at 12:13 pm
Posted on 1/23/23 at 12:13 pm
Have a little one under the age of 1 at home. Looking for some type of account I can put money in to save for future expenses. Whether it be savings account, brokerage account etc. Wife and I are contributing at minimum $50 each per check ($200 a month). Could be more depending on what pops up expense wise each month. Worst case scenario, by the time she turns 18, at $200 a month, we should have around $45k saved up. Idea is we would like to use this to buy a decent car, college tuition, and whatever is left will go towards a wedding.
Wife and I each got degrees in the medical field and each ended up with around 100k in student loans. Hoping to prevent this from happening to our child.
Wife and I each got degrees in the medical field and each ended up with around 100k in student loans. Hoping to prevent this from happening to our child.
Posted on 1/23/23 at 12:18 pm to PappaSwolio
I opened a 529 for both my children. In PA didn't matter which state I used so went with NY saves personally.
Posted on 1/23/23 at 12:37 pm to PappaSwolio
If you are looking into a brokerage for a minor child, you'll probably get steered to a UTMA.
We created accounts as soon as our little ones had their SS#s. We put about $1k a month in each account each month and use the funds for their current tuition, and savings for college. When all is said and done, we are basically using it as a brokerage account to put tuition aside and save about $3-4k a year towards college.
Can use the funds to cover any expenses for the child
You have to start filing returns for your child on their own, as any income earned is at their tax rate.
Usually, a con for the accounts is once they hit 18 in most states, the accounts automatically transfer to them. But sounds like you're looking to do this anyway.
We created accounts as soon as our little ones had their SS#s. We put about $1k a month in each account each month and use the funds for their current tuition, and savings for college. When all is said and done, we are basically using it as a brokerage account to put tuition aside and save about $3-4k a year towards college.
Can use the funds to cover any expenses for the child
You have to start filing returns for your child on their own, as any income earned is at their tax rate.
Usually, a con for the accounts is once they hit 18 in most states, the accounts automatically transfer to them. But sounds like you're looking to do this anyway.
Posted on 1/23/23 at 1:58 pm to PappaSwolio
Went with the UTMA for my kids. No regrets. Only wish I had started it earlier.
This post was edited on 1/23/23 at 1:59 pm
Posted on 1/23/23 at 2:08 pm to PappaSwolio
We have a 529 and UTMAs for our kids. 529 for college and UTMA for vehicles, weddings, etc.
Plan is to roll any unused 529 funds into a ROTH after college to hopefully get them started for retirement.
Plan is to roll any unused 529 funds into a ROTH after college to hopefully get them started for retirement.
Posted on 1/23/23 at 2:24 pm to PappaSwolio
You're off to the right start. I have 3, 400 for one, 250 for the others in 529's
Started a UTMA for my daughters future wedding. $125 a month
Started a UTMA for my daughters future wedding. $125 a month
Posted on 1/23/23 at 3:02 pm to Billy Blanks
I was told UTMAs are considered an asset of the child and when it comes time to apply for college aid (grants and loans), it hurts them pretty bad showing as their assets. 529 is the parent's asset. Kids assets are weighted much more heavily than parent's assets and hurt them more when trying to get aid, so we were told.
Can anyone confirm this, or have direct experience with this? Are UTMAs also subject to kiddie tax?
We opened up a Vanguard age-based direct portfolio 529 last week for our 4-month old son that they offer for Colorado residents/taxpayers and is Colorado tax exempt, through collegeinvest dot org.
Can anyone confirm this, or have direct experience with this? Are UTMAs also subject to kiddie tax?
We opened up a Vanguard age-based direct portfolio 529 last week for our 4-month old son that they offer for Colorado residents/taxpayers and is Colorado tax exempt, through collegeinvest dot org.
This post was edited on 1/23/23 at 3:10 pm
Posted on 1/23/23 at 5:43 pm to ColoradoAg03
quote:
I was told UTMAs are considered an asset of the child and when it comes time to apply for college aid (grants and loans), it hurts them pretty bad showing as their assets. 529 is the parent's asset.
I was reading that about the UTMA’s. Looks like my plan would be just to open an auto investment account with SoFi under my name and use that as a dedicated account to pay for college/car/wedding etc
Posted on 1/23/23 at 6:32 pm to PappaSwolio
That’s what we did (opened up a dedicated brokerage account) plus a 529. We do a set amount each check for the 529 and fund the brokerage infrequently — think kids birthday and Christmas money and just random times throughout the year where we feel like we have a little extra money sitting around.
Our plan for the 529 is fund it enough to help with college, while the brokerage is to help with a future downpayment on a first home
Our plan for the 529 is fund it enough to help with college, while the brokerage is to help with a future downpayment on a first home
This post was edited on 1/23/23 at 6:34 pm
Posted on 1/23/23 at 8:00 pm to TheJunction
Sounds like a solid plan. We may eventually add another account of some sort in our name to grow over the years for future expenses of his that aren’t 529 eligible.
We’re going to stick with just the 529 for now and the monthly auto-contributions we set from our checking account. We haven't yet looked at how another account and its contributions would factor into our budget and if/how much the 529 contributions would need to be adjusted.
We’re going to stick with just the 529 for now and the monthly auto-contributions we set from our checking account. We haven't yet looked at how another account and its contributions would factor into our budget and if/how much the 529 contributions would need to be adjusted.
Posted on 1/23/23 at 9:02 pm to ColoradoAg03
529 is so tax efficient on the growth when you start early. I’m not worried about penalties if for some off reason dollars need to be used for non education expenses at a later date.
I started one with a slug initial investment and then do contributions twice a month. I chose an age based investment just for ease. The cost difference between me managing the portfolio and age based was immaterial.
The ones that popped up in my research were NY, Utah, and Vanguard for low fees with good investment options.
I started one with a slug initial investment and then do contributions twice a month. I chose an age based investment just for ease. The cost difference between me managing the portfolio and age based was immaterial.
The ones that popped up in my research were NY, Utah, and Vanguard for low fees with good investment options.
This post was edited on 1/23/23 at 9:04 pm
Posted on 1/23/23 at 9:08 pm to PappaSwolio
I did the 529 for my 2 year old when she was born. I live in a state that offered no tax benefit. Went through Fidelity because that is where my 401k, IRA, and brokerage. They recommended a New Hampshire 529 plan and I chose the age based funds for the simplicity.
Posted on 1/23/23 at 9:12 pm to lynxcat
Utah’s 529 plan was the standard 20 years ago.
I don’t know if that’s changed, it worked for me & my kids, according to my CPA.
Check with your tax/estate professional.
I don’t know if that’s changed, it worked for me & my kids, according to my CPA.
Check with your tax/estate professional.
This post was edited on 1/23/23 at 9:13 pm
Posted on 1/24/23 at 3:27 pm to soccerfüt
quote:
Utah’s 529 plan was the standard 20 years ago.
Wouldn’t you only get the state income tax deduction if you use the LA start program?
Posted on 1/25/23 at 6:44 am to PappaSwolio
If you have a high deductible health insurance plan, an HSA is a triple tax advantaged account. Max out the contribution amount every year, don’t use it to pay for medical expenses but save all of your receipts (scan them into virtual storage) so you can reimburse yourself at any time later. Most HSAs require you to keep a minimum amount in cash and you can invest the rest. The account is in your name and does not count as an asset for college contribution purposes.
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