(Closed) College Savings for Kids

posted 4 years ago in Finances
  • poll: How are you saving for your child's college?

    529 account only

    529 account plus additional savings/investment account

    Savings/investment account without the restrictions of a 529

    I'm not - kiddo can figure it out for themselves

  • Post # 2
    Member
    8021 posts
    Bumble Beekeeper
    • Wedding: October 2010

    We have 529’s for our two daughters. My husband investigated it and we figured it worked best for our family and situation. We have it deducted automatically and we never miss it. We are due again in February and will set up an account for our 3rd daughter as well.

    Post # 3
    Member
    2942 posts
    Sugar bee
    • Wedding: May 2014

    You only pay taxes and penalty on the earnings portion of the 529 plan.  You would pay full taxes on an investment account as well, with no state tax benefit.  I guess, it is does 10% possible later a better or worse position.  

    It is also unlikely, at least I think, that any child will not at least do technical training/some after high school work.  Maybe not full 4 year university, but HVAC school or even a salon school, which would also be usable for 529 funds. Unless are education system is totally overhauled, I don’t think working straight out of HS will get easier. 

    http://www.savingforcollege.com/articles/20100409-7-myths-and-realities-of-529-plans

    Post # 4
    Member
    4424 posts
    Honey bee
    • Wedding: December 2013

    View original reply
    LilliV :  I’m hesitant to do a 529 because if our son chooses not to go to college or doesn’t need college, he won’t be able to access that money. Until we do more research, we put money into a savings account each month.  I want to make sure he has access to that money easily. I’m thinking we’ll invest some money for him in the next year or two and add to it so it has more of a medium risk and possibly higher gain. But, I’m waiting for my mom to move back home because she’s quite good with this stuff. Right now, we’ll just stick with the savings account. 

    Post # 5
    Member
    1483 posts
    Bumble bee
    • Wedding: September 2015

    I like 529 accounts even though my state doesn’t even have state income tax.  I like that you can change the beneficiary on a 529 account, so if you have multiple kids and one child doesn’t go to college, you can switch it to another child’s name, or your grandchild, or even yourself.

    However I don’t like putting all my eggs in one basket, so I will have savings for my kid(s)’ college other than the 529 account. 

    Post # 7
    Member
    1124 posts
    Bumble bee
    • Wedding: June 2014

    View original reply
    LilliV :  I can’t imagine a scenario in which your child wouldn’t use all of the money, unless you are putting millions of dollars in this fund. (and if you have millions of dollars, i doubt saving for college will be a struggle lol). Since education is highlly valued in your family, I am sure you will send your child to a college prepatory school, so he/she will be grow with a desire to go to a university, or at the very least a trade school. Tuition at my alma mater has doubled since I graduated… and I only graduated 6 years ago. So even in 18 years at $400/month will end up at $86,400… which is pretty standard for a four year degree and that’s not even factoring room and board and books and all the other fun random fees. if by some miracle, your child’s education is less than that, you can always upgrade room and board conditions and I’m sure your kid will love you for that. and honestly, with a penalty of 10%, I’d gladly take it knowing that my kid won’t be carrying student loans for the rest of his/her life.

    Post # 8
    Member
    2942 posts
    Sugar bee
    • Wedding: May 2014

    View original reply
    KatiePi :  I highly suggest you read the above link that input in about 529s.  It is a myth that your kid won’t have access if they don’t do higher education.  There is a 10% penalty to withdraw gains for non-school expenses.  

    Post # 10
    Member
    4424 posts
    Honey bee
    • Wedding: December 2013

    View original reply
    Misswhowedding :  Yes, you are correct. I had misread. Thank you! I still don’t like those limitations a 529 brings with it and that it limits being able to freely move money into other options that could possibly yield higher returns. 

     

    OP, make sure out do thorough research on the additional fees associated with 529s. They are probably with it, but it’s always nice to know the extra expenses. 

    Post # 11
    Member
    4226 posts
    Honey bee
    • Wedding: September 2015 - Hotel Ballroom

    29 weeks pregnant with baby #1! 

    At this time in our lives DH and I can’t afford to start a savings account for college…however we are projecting that we’ll be able to start something by their second or third birthday. Here in Canada they have RESP’s (registered education savings plans). We haven’t done research on which specific plan will be best for our needs, but we will do that when the time comes.

     

    Post # 12
    Member
    9840 posts
    Buzzing Beekeeper
    • Wedding: August 2012

    I thought I read that a 529 can impact their ability to get student loans in the future. We justhave dd’s money in a CD right now.

    Post # 13
    Member
    74 posts
    Worker bee
    • Wedding: June 2018

    I believe the 10% penalty is for gains, not money you put in. And a 529 is considered a parental asset, since it is owned by the parent/relative and they can change the beneficiary at any time. It will also have less impact on financial aid than other assets (except maybe IRA). The CD/savings account options works well if you have a family member who is saving for a child. I save in a savings account for my nieces and nephews in lieu of birthday gifts. Won’t affect their financial aid at all, since it is technically my asset and I can always pay for the school expense directly via wire/etc. It will affect my finances, but since right now the savings is relatively miniscule. When each account reaches enough to hit the minimum for the 529 at my preferred institution, I will transfer it. 

    The topic ‘College Savings for Kids’ is closed to new replies.

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