529 plan

[alison]

I'm going to open a 529 plan for dd2. Any specific ones I should take a closer look at? What have you all been setting your kids up with these days?

[spaz]

We chose 2 different plans for our children... Now, this was 20 years ago so you can look. First, if you have a state plan that will help with income tax, you need to keep that in consideration. In Texas, we don't have an income tax, so that wasn't a factor for us. We chose Missouri for a fixed plan that didn't lose principal and earned like 3 or 4 percent. Then we chose the Utah plan and invested in one of their plans according to their ages. ( It changes the allocation according to their ages.) When each child was a couple of months old, we had the money for each of those plans automatically taken out so that we didn't have to think about it. Every year we re-evaluated the plans and looked to see if we were on track to pay for 3/4 of Baylor each year ( we figured we could get scholarships for at least 1/4 of it.) Then we either made a lump sum payment or we upped our contributions. It has worked out very well for us.

This is the website we used to compare plans:
http://www.savingforcollege.com/compare_529_plans/

[spotty_dog]

Agree on savingforcollege.com as a good resource. We ended up deciding GET was not a value-added option for us. Since we don't have to worry about income tax, we went out of state to find a plan that invested in low-cost index funds. With all our other brokerage accounts already at Fidelity, we found it most convenient to choose New Hampshire's plan that invests in Fidelity Spartan funds, but if you have any Vanguard accounts you might like to go with...I think it's Nevada that has the best investment options.

[alison]

Thanks! I've been reading the saving for college site for a few days off and on, but was getting more indecisive than decisive about what to do.

We got GET for dd1 about 4 years ago, but for whatever reason only got her enough to cover 3 years. I don't remember what our thought process was there. I think we were planning on opening another 529 to supplement that, because at the time there was talk that the GET wasn't going to be able to make its payouts. Something like that--I vaguely remember.

[spotty_dog]

Yeah, we keep second-guessing our college savings plans. We were approaching the annual max this year and suddenly went...waitaminnit. We have a bunch of money in there already. Is there something better/more flexible we should be doing?

I really need to do some research to figure out if there's a prescribed way to stack investment options and cover all your bases. But I think a simple 529 makes a lot of sense for at least setting aside a nice chunk of money, a year or two of LAC tuition or whatever.

(I'm seriously looking into Treasury bonds as one alternative.)

[alison]

Have you been (or did you get) the same plans for each child? I feel like I should get dd2 the same amount of GET units as dd1--for fairness sake...

[spotty_dog]

Have you been (or did you get) the same plans for each child? I feel like I should get dd2 the same amount of GET units as dd1--for fairness sake...

Meh. The funds in a 529 are transferrable to a new beneficiary, so if the eldest has extra left after graduating it can be passed along. We put about the same in each account every year, and since DS's account was started a few years earlier (actually for DS we started with CDs in a Coverdell I think, and have transferred that money over to the 529 as the CDs matured) it has a few grand more in it. It all will shake out.

Looked into Treasury bonds. Pretty sure there's no good tax benefits there for someone in our income bracket, other than tax-deferral.

[alison]

I know, idiotic thinking on my part. But I'm reading "Sibling withiut Rivalry" right now.

[spotty_dog]

I know, idiotic thinking on my part. But I'm reading "Sibling withiut Rivalry" right now.

LOL, funny since I thought part of that book was about *not* emphasizing strict legalistic "fairness" rules but just letting things even out over time.

[alison]

LOL, funny since I thought part of that book was about *not* emphasizing strict legalistic "fairness" rules but just letting things even out over time.

Yes, you are right. I feel like evening up the score for 529s is somehow different in that they'll be adults when these savings become available to them. 😄.

I'm looking at the Vanguard 529, which is actually a Nevada one.

[spaz]

I guess I don't think about fair, but about what they need. In our mind we are saving 3/4 of what it would cost for them to attend Baylor. Now it will cost much more for my daughter who will attend 7 years after my son so it makes sense that we wouldn't save exactly the same amount... And to be honest, it isn't really theirs. What is left over in oldest will roll over to middle, which will roll over to youngest, which might roll over to me if I want to go to seminary or something or get that music degree . ( I have a college degree already.) Or we might roll it over for our grandchildren and have it be a head start for them. I'm thinking our son who is planning on being a preacher might need some help sending his children to college.

[OrionGrad]

We have Oregon 529 plans right because of the tax benefits. If we move out of state for "the job," should we go ahead and open new accounts? Do most people roll the money over, or let it sit in the original account until it's needed?

[spaz]

We have Oregon 529 plans right because of the tax benefits. If we move out of state for "the job," should we go ahead and open new accounts? Do most people roll the money over, or let it sit in the original account until it's needed?

I would think you could do either. I would check and see which is more beneficial. You won't get any tax write-offs on what is already there, but if you like the plan and want it all in the same place, then roll it over. Otherwise, leave it there...

[alison]

Thanks! The kids are set, and this feels great!

[spaz]

Good for you!!! And it will give you peace of mind if something unforeseen happens! That is one less financial stress my husband has right now.