529's

[golfgal]

Originally Posted by BLUEDIAMOND64

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?

The plans are "offered" by states and the states have some benefits if you use them--but not all states have good benefits. MN will match up to $1500/year IF you make under $35,000 but Kansas matches up to $6000/year for residents with no income restrictions.

If your child doesn't go to college you can rename the beneficiary of the plan to another child, to yourself, to a grandchild or close relative (niece/nephew) or you can take the money out, pay income tax and a 10% penalty.

[tmozer]

Looking at the suggested web site, the Utah Educational Savings Plan seems like the best plan.

We are looking to contribute as grandparents to our future grand-daughter's college 529 college fund. We live in Florida. She will live in New Jersey.

It looks like with the Utah state plan we can avoid fees. It has a 4.5 cap rating for out-of-state participants.

Comments??

[Zizza]

You mention that you live in PA and NY. If NY is your primary location, I would think that investing in a 529 is a good idea. You can deduct up to $5k for individuals and $10k for couples filing jointly there (annually). That's a huge benefit in addition to the monies growing tax free.

[gichicago]

Originally Posted by tmozer

Looking at the suggested web site, the Utah Educational Savings Plan seems like the best plan.

We are looking to contribute as grandparents to our future grand-daughter's college 529 college fund. We live in Florida. She will live in New Jersey.

It looks like with the Utah state plan we can avoid fees. It has a 4.5 cap rating for out-of-state participants.

Comments??

I signed up with Utah. It provides straightforward options (Age-Based) to do-it-yourself allocations. I am a do it yourself guy, so I appreciated the i.e good selection Vanguard funds, and their low fees.

I'd definetly consider tax deductions benefits, but consider 1) How long you plan on being in the state 2) Are there any penalties/recapture if you rollover plans from one state to the next.

For example, i live in NYC right now. However, due to my job, housing, kids, etc i have no idea if i will be in NY, or NJ or even IL or CA. Secondly, if I opened up a NY 529, then happened to move to NJ, then roll over my 529 to NJ plan so i get can the tax benefits, i may have to pay back the tax benefits to NYC.

From the New York 529 Website: https://uii.nysaves.s.upromise.com/content/faqs.html#whocaninvestin

"Contributions to the Direct Plan in a tax year are deductible from New York State taxable income, subject to recapture in certain circumstances - rollovers to another state's plan or nonqualified withdrawals."

[tmozer]

Thanks for the reply. We are Florida residents so there is no state income tax to worry about a deduction for. I don't forsee our state status changing.....

For my kids, when we lived in NJ I used NJBest. But there would be no advantage now that we live in FL, as far as I can tell.......

[goldenncmom]

I would put the money into a Roth IRA for you and your spouse. It will not be counted for financial aid calculations, whereas a 529 plan is counted. You can withdraw the money if needed for college and earnings will be tax-free if used for that purpose. If you receive more financial aid and don't need it, the money remains tucked away for retirement.

We have college in 7 years and our strategy is to go for financial aid, as much as we can get, whether it be work study, low interest loans, grants, or scholarships.

[tmozer]

Can we do a Roth IRA even though we are retired and not working? All income is currently from a pension and SS.......