re: What is a "realistic" goal for a child's 529 contribution?

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Every month, I put $100 into an account for each of our kids (we have two), the accounts are a low-cost index fund. At this point, the accounts are in my wife and I's names, not our kids. The small amount of investment income taxes we pay on this is more than offset by the control of me being flexible with how I give them the money later on.

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I've been putting $50/month per kid into a 529 account, but at times i feel like i need to do what you're doing instead. The 529 plan does save us a few bucks on state income taxes, but like you said, the investment fees/taxes might be worth it for the flexibility.

Kids are pretty young still, so i could probably switch the dollars from a 529 to a direct vanguard fund. Would the penalty be about 10% plus state tax?