Comments on: How We Use 529 Plans To Save For College

By: Elizabeth

Elizabeth — Wed, 16 Dec 2020 00:05:47 +0000

Thank you for all of the great info! I have a question–how do you decide how much to donate annually to your 529? My husband and I are lucky to have had a very fortunate financial year and have the ability to contribute basically about as much as we want, and we’re just now starting accounts for our 1 and 3 year olds. Is there a maximum annual contribution that’s tax free? I realize it may vary by state (we’re in MA). Thanks so much!

By: Nemyinspired

Nemyinspired — Tue, 15 Dec 2020 21:31:54 +0000

The idea of starting as soon as possible to save for one’s kids college is totally genius!!

By: Amanda

Amanda — Sun, 12 Jul 2020 05:12:44 +0000

In reply to Erica. Yes! Curious about this as well!

By: Amy

Amy — Thu, 20 Feb 2020 14:46:08 +0000

In reply to Claire. Wow! What state is that?

By: Bob Burakiewicz

Bob Burakiewicz — Sun, 16 Feb 2020 17:34:32 +0000

If you will be looking for financial aid when they go to college the 529 plan will affect it. It is possible the penalty will be as high as 20% per year they are in college. You would be in a better position if the money was in your name. The penalty would be about 5.65%. This is just one of the unknown facts about financial aid. I do workshops on this subject and find many unintentional mistakes parents are making.

By: Mike

Mike — Fri, 31 Jan 2020 19:06:43 +0000

Hi Mrs. FW – on a related matter of helping them save, not sure if you’ve covered it before, but do you pay your little models for appearing on your blog, enabling nice FI tricks like Roth IRAs for them, etc? I’m interested in doing that for my site but not sure of the going rates. Are you able to share any resources or even the rates you use? My daughter is of at least comparable cuteness 🙂

By: Maddie

Maddie — Fri, 24 Jan 2020 20:55:22 +0000

Hi there! I have a question and maybe it’s too state specific to be answered here, but what happens if you open a 529 for your kids in one state and then later move to another state? Since you are no longer a resident of the state you opened the 529 in, are you supposed to open a new 529 in the new state and transfer the money, or can you leave it in the old state’s plan even though you are no longer a resident? Just curious…

By: Kris

Kris — Thu, 23 Jan 2020 00:41:33 +0000

I started my 529s for both my boys right when they we’re born. I believe for our first one, who is 3 now, I opened one a few months before he was born. This is a great option for parents to keep money stashed away for their kids and like you said it will grow more in the stock market. Fortunately, the grandparents have put down a pretty amount for them on both of their accounts. We plan to put down a fixed contribution amount in the next few years but haven’t decided on what that amount will be. So far after putting down $1K on both accounts when it first opened it’s been random contributions from family like our parents and money gifts from Christmas and birthdays.

By: Betsy

Betsy — Wed, 22 Jan 2020 19:50:36 +0000

We love our 529 plans…esp. during this boom economy! The gains are more than the initial investments, by a lot! A agree with a commenter that you need to take the money out early enough that you don’t have to worry about a downward turn in the market. Also we are planning to cash flow $4000 per kid per year in tuition so that we can take advantage of the American opportunity tax credit. (There are income restrictions on this though and you can’t double dip with the 529)

By: Betsy

Betsy — Wed, 22 Jan 2020 19:40:57 +0000

In reply to Ashley. There is a paperwork to transfer between children, so you want each child to have their own account.

By: LongTime Frugal

LongTime Frugal — Wed, 22 Jan 2020 16:52:54 +0000

We took advantage of our state selling “college bonds”, aka zero coupon bonds. Wish we could have purchased more but between those, scholarships (less available for younger kid as the economy tanked for the 3rd but not last time during our married years), and general savings, no debt for either kid or us. Lowest interest rate on the bonds was 6.1%, highest 8.4%, guaranteed. But as most have said, the earlier you start saving, the better. Just watch the fees and fund/fund management. In some states, the criteria for choosing the choice of funds was not without political influence.

By: Natasha

Natasha — Wed, 22 Jan 2020 06:06:12 +0000

Our oldest daughter ended up with a full
College scholarship- book voucher and all so we were able to use her 529 savings for a month in Spain. Our 529 plan doesn’t reimburse for international education but the credits were granted by a local university (Tulane) so we wound up being reimbursed for the month in Spain due to that. win, win! The remainder of her 529 plan can be transferred to our two younger children.