- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Savings Plan for Children - 529 vs. Other Options
Posted on 2/28/24 at 8:57 am to slackster
Posted on 2/28/24 at 8:57 am to slackster
quote:
FWIW I hate 529s. I can’t think of a more commonly wasted vehicle.
More often than not, saving it in an account for yourself and just giving it to your child when you’re ready is the most flexible and reasonable thing to do.
Maybe you dont fully understand the 529?
You can save a lot of money putting that money aside in a 529 for education purposes and even if said kid doesnt go to college (or you pay private school tuition out of it) you can just roll the money into a IRA over time without penalty. It's really a no brainer to me especially with the IRA rule now.
In GA I can deduct up to $8000 a year on contributions to the 529 on my state tax owed (which is at 5.75%). We contribute $200/mo right now so $2400 * .0575 = $138/yr in State tax savings. Once our kid is in college, anything we take out to pay for that is tax free, including all that growth over the years. If we continued to do $200 for 18 years (it will go up over time) we would have over $100k after 18 years and the majority of that is growth at 9% annual RoR. That's a f*ck ton of tax savings as opposed to just throwing that in a brokerage account over the same time.
Even if our daughter doesnt go to college, i can just roll that money into a ROTH IRA for her every year for a while. Seems like every other year now they are giving more and more reasons why a 529 makes a ton of sense.
This post was edited on 2/28/24 at 9:04 am
Posted on 2/28/24 at 9:10 am to thunderbird1100
So is there a better state plan than others or are they all the same basically?
Posted on 2/28/24 at 11:18 am to thunderbird1100
quote:
Maybe you dont fully understand the 529?
I’m a financial advisor with 529s across multiple states. I understand them.
![](https://images.tigerdroppings.com/Images/Icons/IconLOL.gif)
quote:
You can save a lot of money putting that money aside in a 529 for education purposes and even if said kid doesnt go to college (or you pay private school tuition out of it) you can just roll the money into a IRA over time without penalty. It's really a no brainer to me especially with the IRA rule now.
Only up to $35k and it counts against the beneficiary’s annual limits. Also has to be open for 15 years and contributions within 5 years of the first distribution aren’t eligible for rollover.
quote:
GA I can deduct up to $8000 a year on contributions to the 529 on my state tax owed (which is at 5.75%). We contribute $200/mo right now so $2400 * .0575 = $138/yr in State tax savings. Once our kid is in college, anything we take out to pay for that is tax free, including all that growth over the years. If we continued to do $200 for 18 years (it will go up over time) we would have over $100k after 18 years and the majority of that is growth at 9% annual RoR. That's a f*ck ton of tax savings as opposed to just throwing that in a brokerage account over the same time.
It’s obviously state dependent, I’ll give you that, but there are so many ways to pay for college that the minimal tax savings and potential penalties offset the benefit for many people in my experience.
Popular
Back to top
![logo](https://images.tigerdroppings.com/images/layout/TDIcon.jpg)