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Message
Let's Talk College Funds
Posted on 5/27/14 at 3:23 pm
Posted on 5/27/14 at 3:23 pm
I would like to open a college fund for my two week old daughter but am curious about who to invest with and why.
I have an IRA with Vanguard and have checked out their College Fund options. Here is the info from their website:
Read more here: LINK
It seems like a pretty safe/smart investment and is even more appealing since I already have an account with Vanguard.
Would you guys suggest just staying put based on the above information? Or are there better college funds out there - like the START program? Would you guys suggest an aggressive model (all stocks for first 5-10 years) or a moderate/conservative model?
Thanks, as always, for the advice. You guys are great.
I have an IRA with Vanguard and have checked out their College Fund options. Here is the info from their website:
quote:
Fast facts
-Minimum initial investment is $3,000*; minimum additional investment is just $50.
-Total contribution limit is $370,000.
-No enrollment, transfer, or commission fees.
-$20 maintenance fee on balances below $3,000.
-Ugift® offers a convenient way for family and friends to contribute.
-Upromise® services can add to your savings.
Read more here: LINK
It seems like a pretty safe/smart investment and is even more appealing since I already have an account with Vanguard.
Would you guys suggest just staying put based on the above information? Or are there better college funds out there - like the START program? Would you guys suggest an aggressive model (all stocks for first 5-10 years) or a moderate/conservative model?
Thanks, as always, for the advice. You guys are great.
This post was edited on 5/27/14 at 3:30 pm
Posted on 5/27/14 at 3:40 pm to Gugich22
START uses Vanguard funds.
Posted on 5/27/14 at 3:43 pm to Gugich22
Interested in this as well. With his size and athletic genes, I am trying to convince him to start putting in work for that scholarship. All he wants to do is roll around and grunt. Slacker.
Seriously though, what happens when you have $100k saved for the kid and he doesn't go to in state college? Or college at all? Or he is on some sort of full ride? Can it be transferred to other kids or withdrawn?
Seriously though, what happens when you have $100k saved for the kid and he doesn't go to in state college? Or college at all? Or he is on some sort of full ride? Can it be transferred to other kids or withdrawn?
This post was edited on 5/27/14 at 3:46 pm
Posted on 5/27/14 at 3:48 pm to CQQ
quote:
Seriously though, what happens when you have $100k saved for the kid and he doesn't go to in state college? Or college at all? Or he is on some sort of full ride? Can it be transferred to other kids or withdrawn?
From what I have learned, the kid doesn't have to go to an in state college, it applies for out of state as well.
The funds can also be used for graduate work as well.
Beneficiaries can be changed, so if there is money left, it can go to another beneficiary.
The money can also be withdrawn with 10% penalty.
Posted on 5/27/14 at 3:50 pm to 318TigerFan
quote:
The money can also be withdrawn with 10% penalty.
That's not bad at all
Posted on 5/27/14 at 3:52 pm to 318TigerFan
That's good to know. I need to do some more research on this and get it going.
The 10% penalty sucks but if you saved $100k and your kids are on full rides, I'd say you have reason to celebrate. Not only not paying for college but you just got handed an extra $90k you didn't think you'd ever have to play with.
The 10% penalty sucks but if you saved $100k and your kids are on full rides, I'd say you have reason to celebrate. Not only not paying for college but you just got handed an extra $90k you didn't think you'd ever have to play with.
Posted on 5/27/14 at 3:54 pm to CQQ
quote:
That's good to know. I need to do some more research on this and get it going.
I am still learning myself. We are expecting our first in December. If you find anything new, please post it.
Posted on 5/27/14 at 3:56 pm to 318TigerFan
Also, the funds can be used to pay for room & board, books, and other supplies, so even if the kids gets a scholarship, there will likely be some things that will need to be paid for.
Posted on 5/27/14 at 3:57 pm to CQQ
quote:
The 10% penalty sucks but if you saved $100k and your kids are on full rides, I'd say you have reason to celebrate. Not only not paying for college but you just got handed an extra $90k you didn't think you'd ever have to play with.
Think about your gains, though. If your account has more than a 10% growth, then you haven't lost a cent in the long run. I'm not sure what the percentages are for college funds, but that doesn't seem unreasonable.
Posted on 5/27/14 at 4:03 pm to Gugich22
It is my understanding that you are not penalized for getting a scholarship. The value of the scholarship can be withdrawn without penalty, although taxes on the gains will be due.
Posted on 5/27/14 at 4:37 pm to Gugich22
quote:
Thanks, as always, for the advice. You guys are great.
Definitely the most useful board on this site. I'll be following this thread too as Mrs. BS and I are about to get started making future little BS's.
Posted on 5/27/14 at 4:41 pm to 318TigerFan
quote:
The money can also be withdrawn with 10% penalty.
Taxes & 10% penalty.
But as others have said, it can be used on pretty much any "post-secondary education expense". Also, the beneficiary can be changed once a year.
Posted on 5/27/14 at 4:52 pm to kennypowers816
So should I sign up for the SMART program through the Louisiana website? Or will the Vanguard site automatically route me through that plan? Is that my best option?
Posted on 5/27/14 at 6:42 pm to Gugich22
I didn't read through every post but another great feature of 529's is that you can transfer the name on the account so if your little daughter invents the next best product ever to exist at age 16 you can roll it down to your future son who's just worried about arse and titties at no penalty or extra cost
This post was edited on 5/27/14 at 6:44 pm
Posted on 5/27/14 at 6:45 pm to Gugich22
SMART website
I have a start account for each kid then have separate saving/mutual fund. Don't want to put it all in 529 because of restrictions on use
I have a start account for each kid then have separate saving/mutual fund. Don't want to put it all in 529 because of restrictions on use
Posted on 5/27/14 at 7:02 pm to Gugich22
quote:
Think about your gains, though. If your account has more than a 10% growth, then you haven't lost a cent in the long run. I'm not sure what the percentages are for college funds, but that doesn't seem unreasonable.
True. I think that would be a reasonable expectation.
Posted on 5/27/14 at 9:26 pm to CQQ
Go directly through La Start website. My daughter starts LSU next year so I can speak from experience.
First, LA will give you a tax credit on your personal state return when you contribute upto $2400 in a year. That's upto $2400 for you and your spouse or upto $4800. You can put in more than $4800 a year but the tax credit is capped at that for the year. You can put in less of course, I'm just talking about the tax credit.
Second, LA will match a % of your contribution each year. It is a minimum of 2% upto 14% and is based strictly on your Adjusted Gross Income from last year tax return. So you can look at your return fom last year to see what your AGI was, then look at the chart on their site and you will know what % the state will match as you make your contribution this year. It could change each year if your AGI changes.
What if your child gets scholarships or doesn't go to school etc? No problem, you can give to a brother or sister or grandchild a neice or nephew and on and on.
Do a search for "LSU cost of attendance" and it I'll give you a breakdown of what can be taken out of the 529 to pay expenses. It will also give you a target amount to save for.
Our unique situation. For some reason we started a Rhode Island 529 plan years ago in addition to the LA 529 plan. You can have multiple plans even within the same state I.e. Grandparents have one for your child and you have one for your child and your ex has one for your child etc. When we knew she was going to LSU next year we had that RI plan money (over $80,000 at the time) transferred to LA 529. It was opened way back when in my ex-wife's name. As luck would have it, her income last year meant the state would match 9% of contribution so they paid 9% on all $80,000. She only got a state tax credit on the first $2400. Point is you can transfer from one state program to another and not lose anything.
Finally, you can set up to have monthly contributions come out of checking account or send one lump sum check in December. Just don't miss deadline if you do that. Even if you can't do more than $25/mo set it up now and make it automatic. Even if you don't save enough to pay for four years of school it could help pay for something.
Hope I didn't confuse anyone.
First, LA will give you a tax credit on your personal state return when you contribute upto $2400 in a year. That's upto $2400 for you and your spouse or upto $4800. You can put in more than $4800 a year but the tax credit is capped at that for the year. You can put in less of course, I'm just talking about the tax credit.
Second, LA will match a % of your contribution each year. It is a minimum of 2% upto 14% and is based strictly on your Adjusted Gross Income from last year tax return. So you can look at your return fom last year to see what your AGI was, then look at the chart on their site and you will know what % the state will match as you make your contribution this year. It could change each year if your AGI changes.
What if your child gets scholarships or doesn't go to school etc? No problem, you can give to a brother or sister or grandchild a neice or nephew and on and on.
Do a search for "LSU cost of attendance" and it I'll give you a breakdown of what can be taken out of the 529 to pay expenses. It will also give you a target amount to save for.
Our unique situation. For some reason we started a Rhode Island 529 plan years ago in addition to the LA 529 plan. You can have multiple plans even within the same state I.e. Grandparents have one for your child and you have one for your child and your ex has one for your child etc. When we knew she was going to LSU next year we had that RI plan money (over $80,000 at the time) transferred to LA 529. It was opened way back when in my ex-wife's name. As luck would have it, her income last year meant the state would match 9% of contribution so they paid 9% on all $80,000. She only got a state tax credit on the first $2400. Point is you can transfer from one state program to another and not lose anything.
Finally, you can set up to have monthly contributions come out of checking account or send one lump sum check in December. Just don't miss deadline if you do that. Even if you can't do more than $25/mo set it up now and make it automatic. Even if you don't save enough to pay for four years of school it could help pay for something.
Hope I didn't confuse anyone.
Posted on 5/28/14 at 8:10 am to jondavid11
Thanks for the info, sounds like a no brainer.
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