We opened a savings account for DS and keep a minimal amount in there regularly. We will deposit gift money in there and do larger transfers into his 529. The savings account is at the credit union and the plan is to take him to deposit gift money (and potentially allowance) as he gets older.
Not sure I totally understand your 529 question-are you looking for basics? Rules, fees, etc?
DD got a shitton of cash from the grandparents over the last 4 years, so we just opened up a savings account for her. Kid already had over $300 to put into it.
Our FA said our 529 options were too limited for his taste, so we started an investment fund specifically earmarked for DD's college.
It's an investment. Well, everywhere but WA state, where you can only prepay tuition (which is fine by me!)
You probably get a deduction on your state income taxes, but only if you use your state's 529 plan. The best plans are low-fee index funds that automatically move from higher risk/high return assets (stocks, mostly) to lower risk/lower return assets (bonds, mostly) as the kid gets older.
Clark Howard has a very easy to read and helpful guide
We opened a savings account for DS and keep a minimal amount in there regularly. We will deposit gift money in there and do larger transfers into his 529. The savings account is at the credit union and the plan is to take him to deposit gift money (and potentially allowance) as he gets older.
Not sure I totally understand your 529 question-are you looking for basics? Rules, fees, etc?
Is the 529 plan like an investment, or is it basically a savings account with minimal interest?
niq got to this faster-it's more of an investment.
It's just sitting in a capitalone 360 kids savings account. There's not much in there (maybe $1500?).
Honestly I was surprised at the lack of options for kids savings. I guess we'll end up at DH's credit union when she wants to actively manage "her" money from birthdays/holidays.
It's just sitting in a capitalone 360 kids savings account. There's not much in there (maybe $1500?).
Honestly I was surprised at the lack of options for kids savings. I guess we'll end up at DH's credit union when she wants to actively manage "her" money from birthdays/holidays.
Savings account at a local credit union for "liquidity".
We also transfer from there to his 529.
"The 529 College Savings Plan is a vehicle in which you can set aside and invest money for your child’s future college tuition and expenses. The plan is allowed to grow tax deferred and is also withdrawn tax free when used to pay qualified education expenses. There is a 10% penalty on earnings if the funds withdrawn are not used for education expenses. The plans do offer benefits such as transferability to another family member in the event that the proposed beneficiary does not use the funds."
I've been lax about setting up an automatic deposit from us. We are fortunate that both grandparents contribute on the regular!!
TBH we haven't looked into 529 options because the grandparents are handling that part. I know in Virginia you can get a tax break up to a certain amount, which is enticing.
I think we'll probably look into some other investment vehicles once we can contribute more regularly and aren't paying for daycare.
Stupid question: What happens if you save all of this money in a 529 and your child doesn't want to go to college? Are you SOL? Like a FSA if you don't spend all your money in the calendar year?
DD has a savings account for gifts that is linked to our savings. I also plan on opening a 529 and putting some aside every month. We don't have state income tax here but I think the growth will be tax-free.
We set up a 529 through VA. We can deduct the contributions for state income tax purposes. We will probably set up a savings account in the next couple years.
Stupid question: What happens if you save all of this money in a 529 and your child doesn't want to go to college? Are you SOL? Like a FSA if you don't spend all your money in the calendar year?
There are usually fees associated with using it for non-educational purposes, but they still let you have your money back.
Savings at ING and a Utah 529 at uesp.com. We're CA residents so no income tax benefit to opening one here. If you get an income tax deduction for 529 contributions in your state I'd do that, otherwise, Utah has worked great for us.
We keep a smaller amount in his savings and I transfer or buy into his 529 as the market pulls back. Right now all of his money is about 90% in his 529 and 10% in pure savings at ING.
So I haven't done much research but I'm wondering why the Utah 529 is so popular.
I'm in Canada, and every kid gets a 'child care' subsidy (regardless of parental income) of $100 /month for 5 years. So we started an RESP (I think the same thing as a 529) when the boys were born and just direct the $100/month into their education savings, although we'll continue it until they're 18/in college. The govt here also 'tops' up the RESPs so it's to our advantage to max out that system as much as we can.
Otherwise, they both have regular bank savings accounts for the money they've been given at birth/baptism/birthdays. We haven't decided if we're going to divert this money into their RESPs as well, or keep it aside for other things when they're older
We have a 529 through our home state. It was rated pretty highly. C also has a savings account at our bank and a piggy bank in her room. Those have about $100 each in them.
I have a question about rate of return. We selected the aggressive age-based option for her 529 when we made a lump sum initial deposit. In about 6 months or so it's gone up 7%. Is this terrible or decent? If it's terrible, how do we make it better? We would not be comfortable choosing our own specific investments.
We have a savings account at CapitalOne360 and an IL 529.
We will put any un-designated cash gifts into the savings account and we also contribute $100 monthly.
We will put any gifts that are earmarked for college/education into the 529 and we also contribute monthly from our general savings account. The IL tax deduction is up to $20,000 per year for those who are MFJ, regardless of income level, and I am happy enough with the fund selection.
I have also considered an ESA (which I would actively manage myself), but am afraid we will phase out of the income limits before very long, if we aren't already there this year.
I am really lukewarm on custodial accounts. There are no tax breaks or advantages for contributions, once they grow large enough they trigger the child to file their own tax returns, the money doesn't grow tax-free, and once they are 18/21 the money is theirs free & clear to do whatever they want with.
I have a question about rate of return. We selected the aggressive age-based option for her 529 when we made a lump sum initial deposit. In about 6 months or so it's gone up 7%. Is this terrible or decent? If it's terrible, how do we make it better? We would not be comfortable choosing our own specific investments.
In general, 7% in 6 months is fabulous considering most savings accounts pay less than 1% PER YEAR.
I have a question about rate of return. We selected the aggressive age-based option for her 529 when we made a lump sum initial deposit. In about 6 months or so it's gone up 7%. Is this terrible or decent? If it's terrible, how do we make it better? We would not be comfortable choosing our own specific investments.
In general, 7% in 6 months is fabulous considering most savings accounts pay less than 1% PER YEAR.
Thanks. We're such novices at this and I don't want to be stupid with her money.
Like qcinoct, we have the Canadian RESP set up for each kid. We contribute regularly, and when the kids get money (which is only Christmas and birthdays, and generally only about $50 each) I send that in, too. When they get old enough to want to save for things, we'll open a savings account and put gift money there. In Canada, the gov't matches 20% on contributions up to a certain amount per year; that is enough to entice me to do it. The range of acceptable education options is enormous. I'm fairly confident my kids will do something post-high school, be it university or trade school. And if neither does by the time they're 30, we can pull our money out (less the grant money).
Post by kittycatlove on May 14, 2014 14:43:23 GMT -5
Right now we just have a savings account. Our plan is to open a 529 when we're finished with daycare expenses. The only thing I'm concerned about is that DS is an only, so no one to transfer the money to if for some reason he doesn't go to college.
SJ we're in IL as well. Is there an easy place to start to research the IL plan?
Right now we just have a savings account. Our plan is to open a 529 when we're finished with daycare expenses. The only thing I'm concerned about is that DS is an only, so no one to transfer the money to if for some reason he doesn't go to college.
SJ we're in IL as well. Is there an easy place to start to research the IL plan?
Right now we just have a savings account. Our plan is to open a 529 when we're finished with daycare expenses. The only thing I'm concerned about is that DS is an only, so no one to transfer the money to if for some reason he doesn't go to college.
SJ we're in IL as well. Is there an easy place to start to research the IL plan?
It's an investment. Well, everywhere but WA state, where you can only prepay tuition (which is fine by me!)
You probably get a deduction on your state income taxes, but only if you use your state's 529 plan. The best plans are low-fee index funds that automatically move from higher risk/high return assets (stocks, mostly) to lower risk/lower return assets (bonds, mostly) as the kid gets older.
Clark Howard has a very easy to read and helpful guide