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My wife and I are trying to decide what is the best way to save for our newborn son's future college costs. We have opened up a 529 Plan to start saving. We have 18 years in front of us and want to make the best decision possible.
I want to hear from people who has had the experience of saving up and paying their kids college's costs. We are deciding between the 529 prepaid plan (buying semesters at today's prices) vs. 529 invest plan (like a 401k).
1) Were you better off prepaying the semester than putting money in the 529 invest plan and hoping the stock market will go up?
2) Was it a big disadvantage to prepaid but your child ended up going to a private college or out-of-state?
3) If you had to do over again, would you just put your own money into an investment account (outside of 529 plan) and letting it grow. This way you are not restrained by only spending funds on education eligible expenses?
Thank you in advance for your insight.
P.S. My wife and I are fortunate that we are able to max out our retirement savings and have an emergency fund in place. College savings will not take away funds what those two accounts.
We went for the INVEST option. Prepay was too costly for us (57k for a 4 year college 4 years ago....per child....was too much).
So, we put in 104k over 4 years (about 1600 a month spread through the accounts) and we're hoping that this would be sufficient for our 3 kids, 14 and 16 years from now. we are not contributing any more.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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We did UGMA prior to 529 era.
If DS would get someone knocked-up, I would still do UGMA upto the point of taxation and with 529 option to manage the UGMA growth.
Location: Was Midvalley Oregon; Now Eastside Seattle area
13,080 posts, read 7,527,706 times
Reputation: 9814
^It's not the loss of control.
If I had thought the Only was becoming a jerk, brat, spoiled, ingrate, I would have made locked up the UGMA for his betterment. If he doesn't like it, he can sue me.
There are lots of ways to spend an UGMA in their teen years including various types of counsel and counseling, auto insurance, investments that are bought and sold at in-opportune times.
If I had thought the Only was becoming a jerk, brat, spoiled, ingrate, I would have made locked up the UGMA for his betterment. If he doesn't like it, he can sue me.
There are lots of ways to spend an UGMA in their teen years including various types of counsel and counseling, auto insurance, investments that are bought and sold at in-opportune times.
It is loss of control and if you deny that you have zero clue what you are talking about and should avoid giving advice on the topic. There are tons of ways to spend the money all while exposing yourself to legal ramifications of which you can entirely avoid by retaining ownership of the assets through a 529, Roth IRA in your name or a taxable account in your name. Also for fafsa custodial accounts hurt the child more than the others listed iirc
Location: Was Midvalley Oregon; Now Eastside Seattle area
13,080 posts, read 7,527,706 times
Reputation: 9814
I, custodian to UGMA, spent UGMA money for his plane trips to visit relatives, middle school student-to-student program (?), Life Insurance (his), student unsubsidized stafford student loans, PLUS loans, his car, his auto insurance, college tuition, room & board, HS (public) band trip. HS science trips, college application fees, computers 1996 (6th grade) & 2002 (freshman college). And pay his taxes both in STCG and LTCG, tax consultancy and accounting fees for his foreign earnings and domestic earning. Funded IRA or Roths when he had income. Full pay FAFSA family. Son eventually used remainder of UGMA, for possible Go Money on his first job (2008), and finally he extinguished the funds for the his home down payment. The UGMA bought EE Savings Bonds, MF, individual stock some was given and some was bought.
We only had a 529 for a few years, 2001-2006. We still have <$2000 in remaining 529 which has essentially remained static since 2006. Made some poor fund choices that (aggressive and international) that were and are very volatile. We only used the 529 for the 9% tax credit on the $2000 per contributor, OR.
See if a 529 can do this.
Last edited by leastprime; 08-11-2017 at 08:19 PM..
I, custodian to UGMA, spent UGMA money for his plane trips to visit relatives, student-to-student program (?), Life Insurance (his), student unsubsidized stafford student loans, PLUS loans, his car, his auto insurance, college tuition, room & board, HS (public) band trip. HS science trips, college application fees, computers 1996 (6th grade) & 2002 (freshman college). And pay his taxes both in STCG and LTCG, tax consultancy and accounting fees for his foreign earnings and domestic earning. Funded IRA or Roths when he had income. Full pay FAFSA family. Son eventually used remainder of UGMA, for possible Go Money on his first job (2008), and finally he extinguished the funds for the his home down payment. The UGMA bought EE Savings Bonds, MF, individual stock some was given and some was bought.
See if a 529 can do this.
You can do all that with 529 monies, you can also pay your mortgage, buy a corvette or spend money on cancer treatment for your wife
We didn't have mortgage then, owned. A corvette are not great cars. And now that I do have cancer, I have Medicare and LTCi
One couldn't do this with 529 in our time. I'd be careful doing what you suggest using committed 529 money.
your lack of mortgage, opinion of corvettes or your current cancer situation aren't relevant to the current difference between custodial accounts and 529s. I don't need to be careful about my comments about 529 because what I've said is factual and the same goes for custodial accounts. One would need to be careful with unlawfully and knowingly withholding access to custodial monies because your of age kid was a brat or jerk
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I, custodian to UGMA, spent UGMA money for his plane trips to visit relatives, middle school student-to-student program (?), Life Insurance (his), student unsubsidized stafford student loans, PLUS loans, his car, his auto insurance, college tuition, room & board, HS (public) band trip. HS science trips, college application fees, computers 1996 (6th grade) & 2002 (freshman college). And pay his taxes both in STCG and LTCG, tax consultancy and accounting fees for his foreign earnings and domestic earning. Funded IRA or Roths when he had income. Full pay FAFSA family. Son eventually used remainder of UGMA, for possible Go Money on his first job (2008), and finally he extinguished the funds for the his home down payment. The UGMA bought EE Savings Bonds, MF, individual stock some was given and some was bought. 
