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Old 22 September 2019, 10:55
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College 529s Plan

I’ve done some basic research on Google. There seems to be different plans for different states and different banks Nationwide. Ultimately, a lot of information. Which plans have you discovered are the most beneficial? Please tell me all you know about them. I’m really hoping we have a SOCNET 529 guru ����. I’d rather read it from you all here anyways. TIA
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Old 22 September 2019, 11:04
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Originally Posted by CLEARED HOT View Post
Iíve done some basic research on Google. There seems to be different plans for different states and different banks Nationwide. Ultimately, a lot of information. Which plans have you discovered are the most beneficial? Please tell me all you know about them. Iím really hoping we have a SOCNET 529 guru ����. Iíd rather read it from you all here anyways. TIA
I do the NEST plan here in Nebraska. I don't put a lot in, but it pays for books. Remember to keep track of what you take to and keep receipts, just in case.
And don't forget to print off whatever form it is for tax season.
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Old 22 September 2019, 12:27
8654maine 8654maine is offline
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I am not a financial guy.

My wife started 3 different 529's, one each for our kids when they were born.

She looked at various rating sites and picked NH, Missouri, & Illinois 529's.

So far, we (the parents) have not had to dole much out of pocket and the 529's have funded more than 90% of college education.

Just remember a few basic data:

(1) 529's are based on contributions to mutual funds run by states. Hence, if stock markets do well, 529's do well. The converse is also true.

(2) There are "prepaid tuition plans" that also have benefits.

(3) Some states also allow income tax deductions and tax credits.

(4) Grandparents & others can gift into the 529 plan

So far, we have one child in a big time University. Without that 529, I'd probably have to work 2 jobs to send my kids to college.

Start saving EARLY! JUST LIKE RETIREMENT!
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Old 22 September 2019, 13:03
Dino0311 Dino0311 is offline
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Remember that it's not just the type of account that matters, but what sort of funds you use it for. Things to consider are whether the plan is tax advantaged in your state, and then things like investment choice, fees, expense ratio, etc.
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Old 22 September 2019, 14:33
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Originally Posted by Dino0311 View Post
Remember that it's not just the type of account that matters, but what sort of funds you use it for. Things to consider are whether the plan is tax advantaged in your state, and then things like investment choice, fees, expense ratio, etc.
In addition, IIRC you donít have to use the plan for education. You can use it for a variety of things, including using it yourself.
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Old 22 September 2019, 14:48
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I've done two of these, one for my daughter and one for a grandson. They are "pre tax" contributions, so if you don't use them for education purposes, uncle Sam is going to dry fuck you when you remove the money if it's not for education purposes. They're great for people who don't have fiscal discipline. Put the money away and forget it. If you're good with money, there are better ways to invest if you have the discipline to stay out of it till you need it for college expenses.
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Old 23 September 2019, 07:35
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not a 529 guru at all... but.. from what I can tell, which state does the best can vary quite a bit year to year.. consistency is what really matters..

Ohio seems to have the most consistent positive performance over the last decade..

Back when we started them for our kids (the first one about 20 years ago), Georgia was doing well.. so thats what we went with.. by the time the next kid came along, TN was doing well..

I think it probably changes quite a bit year to year honestly..

I agree with Gsniper's comment about there being better investment options.. but.. would offer, that while we are pretty fiscally disciplined (married to an accountant that watches every penny like a hawk).. the 529 and other similar programs (Coverdale)offer a simple, mindless, and very easy way to save for a target.. that was the primary attraction for us.. we set up auto pay accounts with USAA.. and never had to do anything else until each kid went to off to college.. and then it was just a matter of going online and getting USAA to send a check (they even send the check direct to the university and get the receipt for you and send it to you during tax season so that there is zero worries about uncle sam and the tax man)..
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Old 23 September 2019, 14:41
Armitage12 Armitage12 is offline
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In addition, IIRC you donít have to use the plan for education. You can use it for a variety of things, including using it yourself.
My understanding is that it has to be for education, but it need not be limited to "college," that is, four year institutions that we think of when we use the word. Trade schools, professional certifications, and so on are (as I understand from my accountant) fair game.
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  #9  
Old 23 September 2019, 14:47
Gsniper Gsniper is offline
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Yeah, "education" is pretty broad. Flight training, trade schools, tech certificates, all that. Where you get fucked is if you have one that doesn't go to school. Then you have to cash it in and pay the exhorbitant taxes on it. Similar to an early withdrawal from your 401K.
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Old 24 September 2019, 20:09
Saw7616 Saw7616 is offline
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I’ve got two N.C. 529s for the kids. I have to check as I set it up about 9 years ago. But I think I put on 50 a paycheck for each kid. Post tax but let me verify. From the documents school can be defined like others have mentioned.
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  #11  
Old 28 September 2019, 12:32
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Thank all so far. Keep the comments coming
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Old 28 September 2019, 13:35
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Note: If you are not fully funding a Roth IRA, or your kids are old enough to be paid for work or chores - use a Roth as a vehicle for education savings... Money can be removed from a Roth for education regardless of age, with no penalty, to be used for school...

It is what we did for our daughter...

Check with your tax pro to confirm, but this was better for us, as we were not eanting to be paying a penalty if she decided against school...
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Old 28 September 2019, 18:08
13AP3 13AP3 is offline
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Originally Posted by CLEARED HOT View Post
Iíve done some basic research on Google.... Iíd rather read it from you all here anyways. TIA
I am not a financial expert, but I have one kid about to graduate and another who is a sophomore in college right now. The 529s we set up years ago paid for most of their expenses.

I don't have any recommendations on which plan to choose, but check with your state on how contributions may impact state income taxes.

As someone else mentioned earlier, start saving early!

Don't get boxed into the idea that you have to have all of the money before their first year; college can be a marathon and you have time to save even when they're in school already.

When you're 3-5 years out, be sure to move the money to a safer investment. Many plans have a target-date option; that can be helpful.

Finally, when it comes time to withdraw the funds, make sure you keep receipts. MAKE SURE that your withdrawals match the year of the expense! Nothing worse than having the school bill you in December (the date of the expense) and paying it in January of the next year (mis-matched dates). When the school sends the tax forms, it's the bill date that counts.

Maybe it's already been said, but these funds can be used for a lot of other things besides college. College may not be all that it once was (that said, it's still a good investment if you can get your kids through with no debt).

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  #14  
Old 29 September 2019, 00:27
Rockville Rockville is offline
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yup

many 529s preferred instate universities. read the small print if it cannot be used for out-of-state. many instates are 18K while out of states are over 50K

#4 up to 12K per kid per IRS guidelines.

Quote:
Originally Posted by 8654maine View Post
I am not a financial guy.

My wife started 3 different 529's, one each for our kids when they were born.

She looked at various rating sites and picked NH, Missouri, & Illinois 529's.

So far, we (the parents) have not had to dole much out of pocket and the 529's have funded more than 90% of college education.

Just remember a few basic data:

(1) 529's are based on contributions to mutual funds run by states. Hence, if stock markets do well, 529's do well. The converse is also true.

(2) There are "prepaid tuition plans" that also have benefits.

(3) Some states also allow income tax deductions and tax credits.

(4) Grandparents & others can gift into the 529 plan

So far, we have one child in a big time University. Without that 529, I'd probably have to work 2 jobs to send my kids to college.

Start saving EARLY! JUST LIKE RETIREMENT!
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  #15  
Old 29 September 2019, 13:00
riptide riptide is offline
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I had my kids in Rhode Island 529 but after a number of years realized they were screwing me for 4% in fees. Moved the 529's to Texas 529 plan after doing research and determining they had some of the lowest fees.

https://www.texascollegesavings.com/
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  #16  
Old 29 September 2019, 18:16
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MacDuff MacDuff is offline
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There's some good advice here. I'll start at the beginning and add a few thoughts.

First, consider whether you'll benefit by using a 529. The benefits are based on a couple items, all which come back to taxes. First, does your state offer a tax break for residents? Several states offer a state income tax deduction for contributions to 529 plans. Virginia and Indiana are two that come to mind. Second, do you have more than a few years before your child/children go to college? If not, the benefit of tax free growth won't really help because you don't have time to take advantage of compounding.

So basically, if you either get the deduction or have several years prior to college, 529 plans can be a great option.

Next, which plan should you use? You don't have to use the plan provided by your state. In fact, most people are better off looking elsewhere because many states have shit plans. Limited investment options and high fees can eliminate any benefit that you would have received from using a 529 plan. Utah has a solid plan and I would check them out. They have both Vanguard and DFA funds in their plan. You can also just use their age-based investment options if you don't want to get into the weeds of selecting investments. These will handle reducing the portfolio risk as you get closer to time to use the account.

Next, as others have mentioned, expenditures don't have to go directly to the school. Any necessary expense can be paid out of a 529. This can be books, fees, supplies, or even computers. Heck, I've had clients pay for study abroad using their 529.

One question that I get often is what happens if a student either doesn't go to college, or does go to college but gets scholarships and doesn't need their 529 plans. You have a few options here. The first is to withdraw the money and use it for whatever. I would stay away from this option because you'll be taxed on the withdrawal and it's just not pretty. A better option is to retitle the beneficiary of the account. In effect, you can change the beneficiary to another family member who would actually use it, without any tax consequences. You can also change it from a parent to a child. There really isn't a timeline on when they have to be used. Finally, if your kids gets scholarships, they can pull an equivalent amount out of the 529 without paying any penalties.

If your kid goes to a service academy, you can pull the 529 funds out without any penalties and only pay tax on the growth. Ran into that situation last year, which was interesting.
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  #17  
Old 19 November 2019, 20:36
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I know it's a little late. Thank you all for your responses.
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