529 and College Savings

My kids will be heading to college toward the end of this decade. I currently have 36k in each of their 529 accounts (down from about 45k due to the market). The last few years my parents have been giving them each 1k a year to save in their 529 accounts and they give me a nice cash gift that i also just put towards their college savings. Assuming that continues, that’s going to be 40-50k for each kid between now and when they theoretically finish a 4 year degree. I could put in my own savings as well, but this already seems like enough.

So what is the strategy here? I can get a modest tax deduction from my state by putting this in their 529 accounts, but where do i run into issues actually using the money? The kids are smart, but i can’t see spending more than the 25k a year for the state fees.

In CT, back in the day, I’d drop 10K into the 529 plan a month before I needed to pay tuition. Then withdraw the 10K, plus whatever, and get a state tax deduction for the 10K (limit at the time). Not sure if this is still a thing or if other states do this.

That’s a good point, i can take probably take advantage of the state deduction at a later date.

Looking online, i can withdrawal the contributions without penalty, but will pay income tax and a 10% penalty on the earnings. If i have put in 50k of contributions that grow to 100k, does that mean i can use the 50k in earnings to pay for college expenses and/or give to a grandkids 529 one day, and withdrawal back the 50k in contributions without penalty?

eh you have 10 years to go. 36k will be 100k by then even if you stop putting money in it. You’ll be fine.

I felt better about that being the case a year ago.

Expenses that are real but not allowed as 529 withdrawals:
-transportation (plane tickets, parking, etc) to get to/from school
-application fees
-SAT/ACT fees and prep course fees as applicable
-student health insurance if applicable
-room & board expenses that exceed the school’s cost of attendance
-trips to visit colleges that might be of interest

Probably some others that I’m not thinking of. If your income is too high for need-based financial aid then I like a mix of 529 and UTMA/UGMA. Here’s another post I made on this topic with more details about the pros & cons of UGMA/UTMA accounts. Also see the two posts before it, or really the whole thread.

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Imo just send them to community/city college and have them pass actuarial exams