Earnings on 529 plans are not taxable

quote:

---

Kind of sucks if you have $100,000 in one and your kid gets school covered by scholarship

---

Some discretion is necessary when contributing. Pointing of that I see many posters dismissing it as simply a 3% savings on state income taxes.

The biggest complaint as noted by others is what if junior gets a full ride some where.

I don’t know how many kids get full rides to college but odds aren’t in juniors favor

529 is still a pretty good bet.

You can make another child the beneficiary , use it for graduate school, study aboard, roll it to a Roth , school supplies like laptops and tech which most schlorships don’t cover

Also you could keep the unused funds in 529 and set it up for a future grandchild…what a gift and legacy that would be!

So if I contribute to a 529 with taxed income, I will have to pay taxes again on it if the 529 is not needed?

No tax on contribution, just the growth/earnings. Similar to short term capital gains it is taxed at income tax rates rather than more favorable LTCG rates.
Room and board expenses are qualified as well including off campus up to schools COA estimate.

quote:

---

parents need to accept the money you put in there is not coming back to you easily. Once they wrap their brains around that, there is lot of good things that can be done.

---

This is just wrong. It’s easy to access, you just pay a 10% penalty on the gains to do so and lose the favorable tax treatment.

We’ve super funded 529s…they will coast into being whatever value they are when it’s time for higher ed. Roth conversion is also going to be a priority as it is a cheat code for setting up a legacy.

The “Dynasty 529” that plans to roll these over for grandchildren is something I’ve only recently begun to think about. Who knows what tax code looks like in 50 years…

If your child gets a scholarship, convert $35,000 of it to a Roth the first few years when they start working (that’s huge) and eventually change the beneficiary for the rest of it to grandchild. The Roth conversion from a 529 plan would have been a major game changer for 18 year old version of me, but it only became a thing in the last couple of years.

Kind of what we are trying to do.

My kids are 15 months old and 5 years old. We put about $500/month into each of their accounts but we are going to cut that back soon to about $300/month or so pretty soon. They both got a solid lump sum start of about $3,000 when they first got their social security number.

I kind of stress about both of them having similar amounts in their accounts when they turn 18, adjusted for inflation. Going to be challenging.

BTW they can use the 529 funds for room and board. I happen to have a rental house near LSU’s south gates off Highland that they’ll probably inherit one day. .

So what 529 plans is everyone using. I've been putting off on opening one for my kid but I guess I need to try to start funding one a little bit

quote:

---

Kind of sucks if you have $100,000 in one and your kid gets school covered by scholarship

---

Roll it over to grad school.

quote:

---

So what 529 plans is everyone using. I've been putting off on opening one for my kid but I guess I need to try to start funding one a little bit

---

Louisiana START. What state are you in now?

Also - I think you can use this for room and board and pay your own company market rent if you own a home near a campus and your kid stays there. Since my RE investment company will probably be inherited by my kids, I wonder if this is a method of returning that cash to them without restrictions so they can have spending money for whatever they want while I take a little haircut on rent.

I don’t know anyone who has tried this before though.

Many ways to skin this cat if you have rental properties near a campus your kids go toI think. I have 13 years to figure it out. But if you think your kids are going to school in Starkville- maybe look there for a rental house and get ready to pay yourself rent.