Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
It looks like one of the reasons is that the life insurance plan does not lock in the rate for college, where some of the college saving plans do....if I'm reading them correctly.
Another Option: If you are not already contributing to your Roth IRA and are eligible for it, you can use that instead of 529. You can withdraw from your Roth account for education expenses without penalties. Having said that, I do have two 529 accounts for my kids but I don't fund them heavily. I will be using a mix of 529, Roth IRA and my after-tax savings to fund their education.
If you want a guaranteed return, then you don't want a 529 plan.
The limitations on 529 plans do not outweigh the benefits IMO. The best way to address your questions would be to go with a life insurance policy. You can contribute more, the amount saved doesn't count against you in regard to financial aid, you can withdraw the money without any penalty, for any reason, etc.
Take a look. Honestly, I don't know why anyone would choose the 529 over a structured life insurance policy.
Since there seem to be some wise posters on this board, I thought I'd ask the question here. As some of you know, we have two young children and we'd like to present them with as much opportunity as possible. I know there are "Texas" college funds out there, but I have no experience as to which ones offer the most benefits.
Now with that being said, this is where we probably differ from most on this board. We want to encourage our sons to go onto college, but we won't make it a said "requirement". My wife and I have done well without full 4 year degrees ourselves, and though we understand the value in a college degree, education, experiences, we know college isn't for everyone. With that being said, we don't want to dump 10-100's of thousands of dollars into a fund that can only be used for college should one or both of our boys decide to not attend college. We also may get extremely lucky and have both of our children land partial or full fledged scholarships.
*Please keep this from being a discussion on whether college is good/bad/needed/etc, and strictly to answering what would be some good funds for us to look into.
Possible Questions:
-Are any of these funds backed with a guaranteed return year after year?
-Do any allow you to cash out in the event of a child not going to or finishing college?
-Do any penalize your kids from going to an out of state college?
-Penalties for attending a community college first?
-Do these funds only cover things like tuition & board(like some scholarships) or can they be used for any expenses needed in college. Car, groceries, clothes, "the library" , etc.
This is tongue in cheek and serious at once so don't take offense.
You are young and your kid's potential college time horizon mandates that you take risks. If not hoard cash and bury it in mason jars.
These are not going to be precise answers to your questions but ramblings from a guy who has funded 2 529s.
1. I'd advise using Franklin Templeton as the administrator if possible.
A. They answer the phone with real humans who speak perfect English and they know what they are talking about.
B. They never, in my experience, try to cross sell you into other FT investments.
C. They will send you a check or wire money into your account with a phone call.
2. Any investment with a guarantee, excepting European bank barrier notes (BNs are way out of context here - large buy in, specific term, limited trading possibilities - gotta sell the whole thing, fully taxable etc.). Is going to offer a terrible yield.
3. Federal law mandates that 529 monies are usable in every state, public and private schools, with nearly no exceptions. My daughter is at A&M she almost went to Dartmouth - her 529 money would have been usable at Dartmouth. The feds say 529 money is perfectly well spent at community college.
4. I believe but do not know......that car expenses are out.
I'm afraid you'll need to be more specific. A life insurance policy meets the stated criteria of the OP better than a 529 does, and the link illustrates why.
Quote:
Originally Posted by EDS_
This is tongue in cheek and serious at once so don't take offense.
You are young and your kid's potential college time horizon mandates that you take risks. If not hoard cash and bury it in mason jars.
Taking unnecessary risks is stupid no matter what age an investor is.
Quote:
Originally Posted by EDS_
1. I'd advise using Franklin Templeton as the administrator if possible.
A. They answer the phone with real humans who speak perfect English and they know what they are talking about.
B. They never, in my experience, try to cross sell you into other FT investments.
C. They will send you a check or wire money into your account with a phone call.
If those are your only reasons for using Franklin Templeton, you have low expectations.
Quote:
Originally Posted by EDS_
2. Any investment with a guarantee... Is going to offer a terrible yield.
In the last 8 years, the markets have been firmly in bull territory the entire time. A correction is looming, and given the time frame for saving for college expenses here is 15 years or so, you do NOT want to take chances with the next 10 years being like 2001-2008. The smart money is on investments that will protect against market downturns now, and the 529 isn't it.
Quote:
Originally Posted by EDS_
3. Federal law mandates that 529 monies are usable in every state, public and private schools, with nearly no exceptions. My daughter is at A&M she almost went to Dartmouth - her 529 money would have been usable at Dartmouth. The feds say 529 money is perfectly well spent at community college.
...and life insurance funds can be used for anything, anywhere. Far more flexible than a 529.
Quote:
Originally Posted by EDS_
4. I believe but do not know......that car expenses are out.
For a 529, yes. Not for life insurance.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
, etc.
