Saving for college? 529 Plans?

[alioop1028]

Hello fellow WM's

I'm about to start a college fund for the kid and I was wondering what you guys are doing/did, want to do?
H and I are going to have a sit down with our bank in a few weeks to talk about the different 529 plans because we're thinking about going that route. But not quite sure if that is the best? I researched other options but it's really confusing. We don't have a lot of capital to invest in it initially but will consistently be adding to it every month.

Or is it a waste of time? Should I just be putting money away in a normal savings account? Am I crazy to be thinking about this, this early?

FTM, and everything is new and I'm probably spazzing out about everything stupid.

[welly01]

For the moment (DS is 2), we've decided not to start an official college savings fund. I've got student loans to pay so that is more important. I'm just not ready to commit to a 529 plan yet. We don't really talk about paying for college, so I'm not really sure what our plan will be. Probably not the best approach.

[mae0111]

We have 529 accounts for both kids. We ended up using Fidelity (MA 529 plan) simply because we have other accounts with Fidelity. We're hesitant to put too much in there since the latest proposed tax code will kill the capital gains benefits, and there is no state tax benefit in MA. So we contribute a few thousand each year, and DH has a credit card that puts 2% of all purchases into the 529 accounts. Since he travels a ton for work and doesn't get a corporate card, that adds up. Our plan is to have at least a year of tuition saved up for each child by the time they're ready for college.

For the remainder, we have a brokerage account that's earmarked for education. We can access it if we need to for other purposes, but we don't plan to touch it.

[sandandsea]

DS is 3 and we started a 529 when he was born. We did it through our state as it was easiest. Some states have tax benefits for their residents if you use your own states, though not all of them. You can google this as I know there are charts out there. We plan on paying for tuition at an in state school and have been putting $5K/year into his college fund. We do it when we get reimbursed from our daycare FSA account so we never feel like it's an added burden to contribute.

The 529 is pretty safe as I believe there's no tax/penalty for withdrawal upon death or for the amount you've contributed, only for the gains in the account.

If you just invested in mutual funds or index funds, you'd be fine too.

[ericalee27]

We opened 529s for both kids shortly after they were born. We usually dump gift money into there and we put our own regular contributions in. My goal is to be able to fund at least public, in state undergrad for my kids.

[texasmomma22]

We are currently using the Utahs educational savings plan. My husband did hours of research and this was the one he liked the most.

[emmyg65]

Our savings priority is retirement, so we weren't planning to do one, but my inlaws gave us a generous gift to get started when our son was born. I chose the Vanguard 529 because it has good performance and low fees. We put a small amount in every month and plan to do more for birthdays and Christmas and encourage family to do that instead of lots of gifts.

[jlaok]

Each of the kids has a 529 account. I believe that ours are Virginia's 529 (we live in Oklahoma). We picked that one because we could invest in a lot of the same mutual funds that DH and I have in our retirement account. So far only my parents contribute (birthdays and Christmas) but we will start putting in money monthly once DS starts kindergarten.

Below is a really good calculator for college savings projections. It shows that a 4-year in state college education will cost $180k to $220k for DS and DD. I can't imagine them having that amount of loans to pay back. I feel happy knowing that with just a few hundred a month I can help shoulder those costs.

www.archimedes.com/vanguard/csp.phtml

The reasons we chose a 529 are:
~ you choose and control your investments
~ any unused money can be passed to other family (i.e. DS and DD can pass to their kids)
~ you can use it for more than just tuition (fees, dorms, books, etc.)
~ you can take money out at no penalty to match any scholarship received

[alioop1028]

Feb 19, 2015 15:11:22 GMT -5 mae0111 said:

We have 529 accounts for both kids. We ended up using Fidelity (MA 529 plan) simply because we have other accounts with Fidelity. We're hesitant to put too much in there since the latest proposed tax code will kill the capital gains benefits, and there is no state tax benefit in MA. So we contribute a few thousand each year, and DH has a credit card that puts 2% of all purchases into the 529 accounts. Since he travels a ton for work and doesn't get a corporate card, that adds up. Our plan is to have at least a year of tuition saved up for each child by the time they're ready for college.

For the remainder, we have a brokerage account that's earmarked for education. We can access it if we need to for other purposes, but we don't plan to touch it.

That sounds like a good plan. I was worried about the taxes too and I like the idea of not putting all the eggs in one basket. I was at first thinking about only getting a 529 plan but I like your idea better. And the first year sounds awesome. Stealing! Lol

[enigmaticdrscully]

Feb 19, 2015 15:35:36 GMT -5 texasmomma22 said:

We are currently using the Utahs educational savings plan. My husband did hours of research and this was the one he liked the most.

I did some research on 529s and chose Utah too. There were tax benefits to our state plan, but we were 6 months away from moving out of state, so that didn't make sense for us.

[alioop1028]

Feb 19, 2015 15:04:23 GMT -5 welly01 said:

For the moment (DS is 2), we've decided not to start an official college savings fund. I've got student loans to pay so that is more important. I'm just not ready to commit to a 529 plan yet. We don't really talk about paying for college, so I'm not really sure what our plan will be. Probably not the best approach.

My parent's didn't save up for me because they didn't know what I wanted to do and back then you could have a good living without a college education if you had a skill. I ended up going to college and had grants so it didn't matter. You do what works and honestly a family not in debt sounds like an awesome plan to me!

[alioop1028]

Feb 19, 2015 15:22:29 GMT -5 sandandsea said:

DS is 3 and we started a 529 when he was born. We did it through our state as it was easiest. Some states have tax benefits for their residents if you use your own states, though not all of them. You can google this as I know there are charts out there. We plan on paying for tuition at an in state school and have been putting $5K/year into his college fund. We do it when we get reimbursed from our daycare FSA account so we never feel like it's an added burden to contribute.

The 529 is pretty safe as I believe there's no tax/penalty for withdrawal upon death or for the amount you've contributed, only for the gains in the account.

If you just invested in mutual funds or index funds, you'd be fine too.

A state 529 plan was one I was considering. I am just worried that if my kid chooses a trade school they won't be able to access the funds. But in hindsight a paid education is better than one that isn't paid.

[jlaok]

Feb 19, 2015 15:11:22 GMT -5 mae0111 said:

We have 529 accounts for both kids. We ended up using Fidelity (MA 529 plan) simply because we have other accounts with Fidelity. We're hesitant to put too much in there since the latest proposed tax code will kill the capital gains benefits, and there is no state tax benefit in MA. So we contribute a few thousand each year, and DH has a credit card that puts 2% of all purchases into the 529 accounts. Since he travels a ton for work and doesn't get a corporate card, that adds up. Our plan is to have at least a year of tuition saved up for each child by the time they're ready for college.

For the remainder, we have a brokerage account that's earmarked for education. We can access it if we need to for other purposes, but we don't plan to touch it.

Pretty sure Obama renounced that proposal.

[alioop1028]

Feb 19, 2015 15:24:18 GMT -5 ericalee27 said:

We opened 529s for both kids shortly after they were born. We usually dump gift money into there and we put our own regular contributions in. My goal is to be able to fund at least public, in state undergrad for my kids.

I like the idea of adding the gift money in. The more I'm reading about in-state schools and public schools, I'm changing my mind about giving LO options for trade school.

[alioop1028]

Feb 19, 2015 15:54:16 GMT -5 privacy said:

We have a 529 for both. Honestly, DH was in charge of this so I'm unsure of the details but know that we got one that doesn't limit where they go to school (I believe some are reserved for certain states)

We also recently opened up a dedicated savings account for DD - meaning a regular savings account that we have earmarked for college. She puts a percentage of her allowance and all gift money into it. (Per her budget it's 20%). The plan is she'll continue to put money into there and will partially pay for college that way

I really am liking the idea of having multiple accounts. And I can transfer any money from the regular account into the 529 plan if I want to. And LO can use the account for living expenses when she goes to college.

[alioop1028]

Feb 19, 2015 16:02:31 GMT -5 emmyg65 said:

Our savings priority is retirement, so we weren't planning to do one, but my inlaws gave us a generous gift to get started when our son was born. I chose the Vanguard 529 because it has good performance and low fees. We put a small amount in every month and plan to do more for birthdays and Christmas and encourage family to do that instead of lots of gifts.

Nice! I didn't know Vangaurd had 529 plans. I have my 401 K with them. I'll definitely check it out.

[alioop1028]

Feb 19, 2015 16:05:15 GMT -5 jlaok said:

Each of the kids has a 529 account. I believe that ours are Virginia's 529 (we live in Oklahoma). We picked that one because we could invest in a lot of the same mutual funds that DH and I have in our retirement account. So far only my parents contribute (birthdays and Christmas) but we will start putting in money monthly once DS starts kindergarten.

Below is a really good calculator for college savings projections. It shows that a 4-year in state college education will cost $180k to $220k for DS and DD. I can't imagine them having that amount of loans to pay back. I feel happy knowing that with just a few hundred a month I can help shoulder those costs.

www.archimedes.com/vanguard/csp.phtml

The reasons we chose a 529 are:
~ you choose and control your investments
~ any unused money can be passed to other family (i.e. DS and DD can pass to their kids)
~ you can use it for more than just tuition (fees, dorms, books, etc.)
~ you can take money out at no penalty to match any scholarship received

Your link to the graph gave me a slight heart palpitation.
Your response and others have cemented my resolve with going with a 529 plan. I like the idea of any unused money being able to be transferred. And I didn't know you could take it out to match any scholarship. That's awesome.

[callmeKD]

my MIL opened a 529 for each of her grandkids. we haven't contributed to it and won't until we have our student loans paid off. we also have a savings account for G and any/all money she gets as gifts goes into that account.

[sandandsea]

Feb 19, 2015 16:42:09 GMT -5 alioop1028 said:

Feb 19, 2015 15:22:29 GMT -5 sandandsea said:

DS is 3 and we started a 529 when he was born. We did it through our state as it was easiest. Some states have tax benefits for their residents if you use your own states, though not all of them. You can google this as I know there are charts out there. We plan on paying for tuition at an in state school and have been putting $5K/year into his college fund. We do it when we get reimbursed from our daycare FSA account so we never feel like it's an added burden to contribute.

The 529 is pretty safe as I believe there's no tax/penalty for withdrawal upon death or for the amount you've contributed, only for the gains in the account.

If you just invested in mutual funds or index funds, you'd be fine too.

A state 529 plan was one I was considering. I am just worried that if my kid chooses a trade school they won't be able to access the funds. But in hindsight a paid education is better than one that isn't paid.

Most trade schools count for 529 plans.  www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php   This website is very helpful to clearly explain 529 plans.  Here are some of the common myths too:  www.savingforcollege.com/articles/20100409-7-myths-and-realities-of-529-plans

[CoverGirl82]

We have a 529 for each LO through Franklin Templeton. DH was in charge of researching which company to use; I think Franklin Templeton was very flexible in terms of the state they choose to go to school in. We opened each account shortly after each LO was born. We auto deposit money into each account so that we don't have to remember to do it. My parents will usually contribute money to the accounts around each LO's birthday. We're definitely not trying to save to pay for all of their college - they need to have some skin in the game too and try to get scholarships and/or loans.

[alioop1028]

Feb 20, 2015 13:40:02 GMT -5 sandandsea said:

Feb 19, 2015 16:42:09 GMT -5 alioop1028 said:

A state 529 plan was one I was considering. I am just worried that if my kid chooses a trade school they won't be able to access the funds. But in hindsight a paid education is better than one that isn't paid.

Most trade schools count for 529 plans.  www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php   This website is very helpful to clearly explain 529 plans.  Here are some of the common myths too:  www.savingforcollege.com/articles/20100409-7-myths-and-realities-of-529-plans

Thank you! This is really helpful! 

[alioop1028]

Feb 20, 2015 13:41:10 GMT -5 CoverGirl82 said:

We have a 529 for each LO through Franklin Templeton. DH was in charge of researching which company to use; I think Franklin Templeton was very flexible in terms of the state they choose to go to school in. We opened each account shortly after each LO was born. We auto deposit money into each account so that we don't have to remember to do it. My parents will usually contribute money to the accounts around each LO's birthday. We're definitely not trying to save to pay for all of their college - they need to have some skin in the game too and try to get scholarships and/or loans.

I felt a a lot of pressure to completely save for the future and didn't even consider the option of only partly financing college. I don't even know why. But reading your plan and a few others make me feel better about doing as much as I can. And perhaps contributing a little less for immediate debt or savings.

[doodler]

This is one of our goals for 2015. We are meeting with my cousin, who is a newly minted investment planner and needs to "practice", next week. I plan on discussing this with him and if he doesn't have much insight into the options we will be making it a priority to do more research. This thread was a good kick in the butt!