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We have two boys ; 9 & 11 and while we know we should have put something away before now, its only now that we can actually afford it.
Are they worth it? The other dilemma is that we are hoping to move to pa in the next few years and dont know if it would be better to start a 529 here in NY or in PA ; we do have a home in both states.
How much can someone put away, is there a cap and what is the normal amount?
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I think it is better to put your contributions into their (the kid's) ROTH and your own ROTH at this point. Have the kids get loans when they get in college, then AFTER graduation have them or you pay off the loans or interest. I feel the opportunity costs for you in a 529 could be a HUGE disadvantage (unless you have giant state income and taxes... I was in a 'income tax free' state, so no 529 applicable).
My kids started their own ROTHs ages 10 and 12 (they got income from work around house + farm + helping at our income properties... hint; only pay them 'Market-rate' and for kids NEVER by the hour, have them 'quote' the job and award to best price AND QUALITY (also use neighbor kids for healthy competition and best prices)). An EZ business for them is eBay. One of our homeschool friends was making $20k / yr at age 14 buying used hard drives and memory in bulk from manufacturers and cleaning and configuring then reselling on eBay. Our kids each had over $20k in ROTHs by college (jrs in college at age 18 due to utilizing FREE college instead of HS, available (but not advertised) in many states). They also had over $50k each in real estate equity, as I had them design (via CAD) & build their own houses during 9th and 10th grade (boys need to be ACTIVE not sit in classrooms).
Neither got any support from us for college, nor did they touch their home equity OR ROTH's (their choice, not mine). They each consolidated ~$14k in loans for 20 yrs at 2.7% and 4.3%: They are in no hurry to pay that off . They made good choices in study content and habits since they paid 100% for their own college. ROTHs are great, as they are fully accessible for college, AND you can take your original contributions (not earnings) out W/O penalty after 2 yrs. AND (MOST IMPORTANTLY) IRA's are NOT considered part of your 'Family-contribution' on FAFSA (this is a BONUS!!!! for you and your kids accts)
Good luck, have fun. let your kids blossom (on their own). This pays "Long term dividends"
There are lots of options that you need to consider. I personally would think that some sort of plan for paying for college is crucial and a much more pressing concern that any kind of retirement planning which is many times further out in the future.
I think that there have been several plans that have been demonstrably BAD for too many participants, often because their "age based target plans" are dumping grounds for HORRIBLE funds. It may be better to structure things on your own and there are ways to do that regardless of where you live becuase there are plans from other states that are open to everyone. Lots of felixibility, but also A LOT of responsibility / research for some people...
Check to see if your state has any matching funds if you contribute to a 529. You can also get a tax deduction for putting money into a 529 but your time horizon for growth isn't all that great. If you already have a ROTH and you aren't maxing out your contributions to that, it might be a better avenue if you don't have matching funds from your state. Some states match up to $6000/year so if that is the case where you live, I would say yes, go with the 529. What state are you in?
Why would anyone want to invest money where the state decides where the money goes? So, if the state, or in this case the Commonwealth makes unfit choices, this is where your money is tied up.
Why would anyone want to invest money where the state decides where the money goes? So, if the state, or in this case the Commonwealth makes unfit choices, this is where your money is tied up.
The state doesn't decide where the money goes, you do. They are state SPONSORED plans that have some tax benefits but they are actually just mutual funds specified for college expenses. The Virginia Plan, for example, is run through American Funds.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by golfgal
...The Virginia Plan, for example, is run through American Funds.
YIKES, I hope not through the 7% Loaded funded that American is (was) so famous for. Hopefully they have some no-load offerings. I left them in the 80's after I figured out how tax inefficient growth mutual funds were (those with taxable distributions). My broker got fat on that deal, shame on me.
YIKES, I hope not through the 7% Loaded funded that American is (was) so famous for. Hopefully they have some no-load offerings. I left them in the 80's after I figured out how tax inefficient growth mutual funds were (those with taxable distributions). My broker got fat on that deal, shame on me.
The state doesn't decide where the money goes, you do. They are state SPONSORED plans that have some tax benefits but they are actually just mutual funds specified for college expenses. The Virginia Plan, for example, is run through American Funds.
Thanks for the tip, but personally I do not trust anything that is state sponsored. We have invested already and have made five percent. The other question is what happens to that 529 if your child decides not to go to college?
Thanks for the tip, but personally I do not trust anything that is state sponsored. We have invested already and have made five percent. The other question is what happens to that 529 if your child decides not to go to college?
I posted the link to the site above because you really need to understand what the purpose / pluses / trade-offs of a 529 all are:
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)). An EZ business for them is eBay. One of our homeschool friends was making $20k / yr at age 14 buying used hard drives and memory in bulk from manufacturers and cleaning and configuring then reselling on eBay. Our kids each had over $20k in ROTHs by college (jrs in college at age 18 due to utilizing FREE college instead of HS, available (but not advertised) in many states). They also had over $50k each in real estate equity, as I had them design (via CAD) & build their own houses during 9th and 10th grade (boys need to be ACTIVE not sit in classrooms).
They are in no hurry to pay that off 
. They made good choices in study content and habits since they paid 100% for their own college. ROTHs are great, as they are fully accessible for college, AND you can take your original contributions (not earnings) out W/O penalty after 2 yrs. AND (MOST IMPORTANTLY) IRA's are NOT considered part of your 'Family-contribution' on FAFSA (this is a BONUS!!!! for you and your kids accts) 
I hope not through the 7% Loaded funded that American is (was) so famous for. Hopefully they have some no-load offerings. I left them in the 80's after I figured out how tax inefficient growth mutual funds were (those with taxable distributions). My broker got fat on that deal, shame on me.
The basics are important to understand...
