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How much is enough in the 529 accounts?
Posted on 10/5/20 at 10:56 am
Posted on 10/5/20 at 10:56 am
I'm doing some end of the year planning and my 5-year-old has almost 14k in the start account. I know that isn't near enough, and I plan to keep contributing since I can. However, this made me wonder if any of you are shutting it down when you hit a certain number. Or are you just contributing until they finish high school?
Posted on 10/5/20 at 11:02 am to ashy larry
Wife and I are contributing to both kids up to the annual state deduction limit.
I think we will likely back off/stop during high school. It'll mostly depend on how much they have and whether it appears they will be smart or not
I think we will likely back off/stop during high school. It'll mostly depend on how much they have and whether it appears they will be smart or not
Posted on 10/5/20 at 1:16 pm to ashy larry
We do $200/month for 1 kid since he was born. The idea is that over the course of 18 years, contributions alone will be $43k + growth (6% annual conservative estimate) would give us ~$75k. Probably won't cover the full 4 year cost but I think there will be a major bubble burst in the next 18 years. Higher ed costs can't continue on the current trajectory.
Posted on 10/5/20 at 2:13 pm to TigerTatorTots
quote:
would give us ~$75k
That's about what I estimated as well. We spend roughly $14k/year on each kid's tuition, summer camps, aftercare, etc and that money could just be put towards college as well. I'm not sure I'll need the full $75k when my kids reach college. If I knew TOPS would still be a thing in 12-13 years, then I certainly wouldn't need it. I'm just thinking that at some point I might be better off sticking the money elsewhere.
Posted on 10/5/20 at 3:24 pm to ashy larry
Looking into this as well. The state has a 529 and its matches up to a certain %, but it can ONLY be used for college stuff. If you take out money after that it’s like a 10% penalty.
Is this what everyone is doing or is there something else out there?
Is this what everyone is doing or is there something else out there?
Posted on 10/5/20 at 4:07 pm to ashy larry
I'll have about $55K for each child (2) when they go to college so whatever is in there is what they will get. If that's not enough they better keep studying hard for scholarships or take out a loan if they want to go to a more expensive school. I'm maxing out my retirement accounts. That's more important than saving $100K for each kid for college when there's tons of money out there to help. I'm hoping that I won't have to use any of that money and they get full rides somewhere.
Posted on 10/5/20 at 5:08 pm to ashy larry
Aiming for 50k per kid in 529. I’ll fund the rest as needed. Don’t want to get caught with too much trapped in 529 incase they don’t go at all or do a technical degree.
Posted on 10/5/20 at 5:24 pm to tigersfan1989
Our goal was 100k for both kids when they were born. We reached that level and with growth we had @127k when the first went to college last year. She decided to go out of state and we believe we have enough with scholarship $$ to cover the 4 years.
If you stay in state and tops doesn’t change we estimated that 60 to 80k would be the number.
If you stay in state and tops doesn’t change we estimated that 60 to 80k would be the number.
Posted on 10/5/20 at 6:04 pm to ashy larry
Are there any stipulations as to what the money can be applied to? Like room and board? Transportation, etc. Or is it basically just tuition only?
This post was edited on 10/5/20 at 6:05 pm
Posted on 10/6/20 at 9:28 am to Triple Bogey
My daughter has a loan at 1.5%, anything can happen so don’t oversave in 529, just do enough that it takes the impact away when they go.
Biden going to give you some free too....
Biden going to give you some free too....
Posted on 10/6/20 at 9:46 am to Purpleblooded
I use a UTMA. It does not get the tax advantages or match as a 529, but you can use it on anything relating to the child. Also, the interest is taxed at the child's tax rate. Right now we use it as a savings for college as well as to cover next year's tuition. When the bill comes, we just request that amount to come out. I would like to be able to foot 6 years of college as I think grad school will be necessary, but I am also not trying to kill myself and sacrifice living life for the sake of possibly needing the funds for college.
You can use these funds on anything for the child, tuition, meals, clothes, car, room & board...
Down side to the UTMA, control turns over to the child at 18 (some States it is 21), so it will become their money and can blow it how they want. When in HS we will try to teach them about the value of not blowing the funds on top end cars, hookers & blow, stupid tech... basically the shite we did
You can use these funds on anything for the child, tuition, meals, clothes, car, room & board...
Down side to the UTMA, control turns over to the child at 18 (some States it is 21), so it will become their money and can blow it how they want. When in HS we will try to teach them about the value of not blowing the funds on top end cars, hookers & blow, stupid tech... basically the shite we did
Posted on 10/6/20 at 10:32 am to Triple Bogey
quote:
Are there any stipulations as to what the money can be applied to? Like room and board? Transportation, etc. Or is it basically just tuition only?
LA Start FAQs
quote:
What are the expenses that can be paid with START account funds?
These funds may be used to pay Qualified Higher Education Expenses, which are limited to the following:
Tuition
Fees
Books
Supplies
Equipment
Room and Board (if the student is attending on at least a half-time basis)
Expenses for "special needs"
"Room and board" is different for each college. For 2019-2020, I believe LSU was roughly up to $12k per year. So you could withdraw $12k per year per student for room and board. My kids aren't near the age yet so maybe someone with experience can explain how easy this works. I think on-campus expenses can be withdrawn to the exact amount. However, I'm not sure if off-campus living expenses have to be 'proven'.
Posted on 10/6/20 at 2:05 pm to ashy larry
My son(14) started getting about $1,100 per month in Social Security last year. I just transfer the exact amount into the plan. I figure it will be a great start even if it's not enough.
Posted on 10/6/20 at 7:18 pm to ashy larry
It’s costing me about $17K/year right now at LSU
Tuition
Books
Rent
Food.
Tuition
Books
Rent
Food.
Posted on 10/8/20 at 6:34 am to AlxTgr
quote:why does he need college if he’s already retired ?
My son(14) started getting about $1,100 per month in Social Security last year.
Posted on 10/8/20 at 7:05 am to contraryman
Funding up to $100k before high school is the goal for three kids. The 5 year old has 70k, 3 year old has 12k and the baby has 0. I hope to knock out the 5 year old in a couple of years
Posted on 11/3/20 at 11:35 am to Captain Crackysack
quote:He's in 9th grade.
why does he need college if he’s already retired ?
Posted on 11/3/20 at 3:00 pm to TigerTatorTots
quote:
I think there will be a major bubble burst in the next 18 years. Higher ed costs can't continue on the current trajectory.
I'm absolutely not picking on you.
People say this all the time, and I'd love for it to be true...but I'm not sure its actually going to happen. Especially since credit is available to pay for it. I can see the astronomical costs rate of growth slow, but there would have to be some major, major contraction to bust that bubble.
Posted on 11/3/20 at 3:30 pm to Weekend Warrior79
quote:
I use a UTMA. It does not get the tax advantages or match as a 529, but you can use it on anything relating to the child. Also, the interest is taxed at the child's tax rate. Right now we use it as a savings for college as well as to cover next year's tuition. When the bill comes, we just request that amount to come out. I would like to be able to foot 6 years of college as I think grad school will be necessary, but I am also not trying to kill myself and sacrifice living life for the sake of possibly needing the funds for college.
You can use these funds on anything for the child, tuition, meals, clothes, car, room & board...
Down side to the UTMA, control turns over to the child at 18 (some States it is 21), so it will become their money and can blow it how they want. When in HS we will try to teach them about the value of not blowing the funds on top end cars, hookers & blow, stupid tech... basically the shite we did
With the exception of a car, every expense you mentioned can be paid using 529 assets tax free.
Also, while the first $1,100 of earnings in a UTMA is actually tax free, and next $1,100 is taxed at the child’s tax rate (Kiddie Tax), any earnings above that are taxed at the parent’s income tax rate.
Additionally, for the purpose of calculating expected financial contribution, and subsequently need based financial aid, UTMA assets are considered assets of the child, and up to 35% of those assets can be included in the expected contribution formula. 529 assets on the other hand, are considered assets of the parent, and are included at a max rate of 5.6%.
Finally, the ”beneficiary” on a UTMA account cannot be changed, because the assets actually belong to the minor. On the other hand, if you have excess funds in one child’s 529 account, you may change the beneficiary of those funds to another child or relative at any time.
The only pro I can think of for a UTMA vs a 529 account is a wider range of investment options in a UTMA, but there are 529 providers with low cost etfs on their platforms these days.
When saving for educational expenses, UTMA accounts are inferior in almost every way to 529 plans.
Posted on 12/17/20 at 3:11 pm to CrawfishOfWallstreet
Has anyone opened a 529 K12 account? I was checking my son's 529 performance and saw the announcement of the K12 program that apparently began in 2019. It appears that I have to open a second account for the K12, and any funds from it can roll over to the traditional START account if needed. You cannot move funds from the START to the K12, though.
My son will begin private school kindergarten next year, so I'm thinking that I should open a K12 and pass money through to pay for his private school education. Anyone doing this?
My son will begin private school kindergarten next year, so I'm thinking that I should open a K12 and pass money through to pay for his private school education. Anyone doing this?
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