https://boards.hellobee.com/ Pregnancy, Baby and Parenting blog, by Hellobee en Thu, 07 May 2026 00:15:04 +0000 https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652697 Thu, 22 May 2014 16:51:56 +0000 sunny 1652697@https://boards.hellobee.com/ <p>Are your retirement accounts fully funded? That might be an option. You can earmark the funds for your LO's education but put the money in a Roth IRA. Obviously a Roth IRA has different withdrawal rules than a 529. Here's a good article: <a href="http://www.fool.com/money/allaboutiras/allaboutiras07.htm" rel="nofollow">http://www.fool.com/money/allaboutiras/allaboutiras07.htm</a></p> <p>In my (unprofessional) opinion, the money needs to be doing something better than earning interest in a bank account. You are literally losing money every year due to inflation. </p> https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652624 Thu, 22 May 2014 15:57:12 +0000 aegie 1652624@https://boards.hellobee.com/ <p>@loveisstrange: each state has their own plan but from my understanding if your kid has a full ride, and you don't need the money for higher education, you can withdraw the money without penalty. but you will need to document that she got a full ride obviously. </p> <p>for me, i'm putting money into an IRA instead. I'm maxing it out annually in addition to my 401(k). You dont get penalized for withdrawing money for higher education. </p> https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652621 Thu, 22 May 2014 15:55:57 +0000 yoursilverlining 1652621@https://boards.hellobee.com/ <p>This got long, sorry :silly: </p> <p>To address a couple of your questions:</p> <p>What if she gets a full ride somewhere? Full rides are very rarely given out, and in just the past few years the financial aid landscape has changed a lot, and even fewer full rides are given out now than just a few years ago. I would personally not factor this possibility into my decision, because it is so rare that that will happen. Grants are also harder to get now than in the past, and for many schools, the pool of money formerly used to fund scholarships is going to be a thing of the past because of legislative changes to the way public universities are funded. Monies in a 529 don’t have to be used just for straight tuition and books, so even if your LO got a full ride somewhere, it’s very likely she would still have qualifying educational expenses. </p> <p>What is she wants to use it for a house or wedding? Well, I think you have to decide whether or not you think higher education is more valuable than a down payment on a house or a wedding. If you do, then I think it makes sense to protect it for that purpose and not make it available for general/other use. If you want to let your LO decide how to use the sum of money, then maybe it makes more sense just to invest it generally.</p> <p>A 529 account should make significantly more money than you’ll ever see off a regular savings plan, even if it’s invested only marginally well. If it’s invested very well, the returns on your investment should be quite good – the good news is you invest with a Plan, so you don’t have to really do anything; the hard work is done for you by a professional. Your “income” growth on the 529 account is tax-deferred, unlike other investment options and when you withdraw money (properly) from a 529 to pay educational expenses, those funds are not federally taxed. Assets within a 529 plan are protected in the case of bankruptcy. </p> <p>Some states also offer tax breaks for 529’s and the deposits you make into them each year.</p> <p>We have a 529 for LO because we think it’s the best way to grow money and protect it for college. </p> https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652595 Thu, 22 May 2014 15:44:39 +0000 lawbee11 1652595@https://boards.hellobee.com/ <p>@loveisstrange: 529s cover a lot more than just tuition (they cover "qualified education expenses" which include room &amp; board, books, computers, and I believe it would even cover a car if your LO commutes to college). It covers universities, trade schools, and community colleges, too. If you use the money towards tuition or any of these other qualified expenses then you don't have to pay income taxes on earnings when you withdraw it (so that means huge tax savings if you factor that in with the money you're making by investing in the first place). </p> <p>If you withdraw money and don't use it for any of these qualified expenses then you do have to pay income tax + a 10% penalty on any earnings. You can change the beneficiary on the plan, too (so say you open one for LO1 and she decides not to go to college...you could then change the plan to make LO2 the beneficiary). </p> <p>We have one for M. I think it's the best option when it comes to college savings. </p> https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652587 Thu, 22 May 2014 15:40:45 +0000 swedishfish 1652587@https://boards.hellobee.com/ <p>@loveisstrange: I don't really have any advice other than my parents' financial planner gave them all of the reasons you listed to NOT start 529 plans for me and my sisters. We will not do a 529 for LO but we will look into mutual funds (most likely). </p> https://boards.hellobee.com/topic/talk-to-me-about-529-planssaving-towards-your-childs-future#post-1652577 Thu, 22 May 2014 15:34:30 +0000 loveisstrange 1652577@https://boards.hellobee.com/ <p>I feel like we really need to get on this issue with C. She's 2 and I feel like we're slacking. haha.</p> <p>Anyway, we have a good chunk of money set aside for C already. We divvied up a chunk of DH's inheritance from his dad and it would cover probably 2-3 years of college. If we wind up with a 2nd LO, the amount will get split between them evenly. It's just sitting in a regular savings account right now. I'm trying to decide if something like a 529 plan is best or if rolling it into other investments that don't have to be used on higher education would be better.</p> <p>Part of me struggles against putting it into a plan that has to be used on college. What if she gets a full-ride somewhere? What if she'd rather use it towards a down payment on a house or a wedding, or all 3? Is there a way to remove the money from a 529?</p> <p>Explain this to me like Im 5, because I'm pretty investment/financially illiterate but I don't want her in the same position I was in with no college money and $$$$ in loans. </p>