Pretty much what @ALivelySedative said. With a 529, if your kid just doesn’t go to college, I believe (not 100% sure) that it’s treated like a standard taxable brokerage. I’d rather contribute to the account that definitely will be tax-advantaged when I retire, then contribute to the possibly tax-advantaged account or pay out of pocket at the time.
(If your kid gets scholarships, I think the 529 has allowances for tax-free withdrawal. Haven’t used a 529 myself so a bit fuzzy on details.)
It’s also a question of priority. Would I like to pay for my son’s college? Absolutely, at least a big chunk of it. So it’s important. But if that comes at the cost of me not saving enough and putting myself at huge risk in retirement, I’d argue it’s not worth it for many.
I don’t yet max the 529 for my son. I’m working on it!
You pay tax plus a 10% penalty to withdraw for non-education related stuff. You can transfer the beneficiary though to another child/grandchild/nice guy on street.
Certainly, that’s why I mentioned it’s probably a question of a bit of both. I more took issue with the notion that I’d not contribute to a 529 because I was finishing up maxing out my 401k.
Does anyone else feel like maxing a 529 is overkill? If I maxed now every year until my dtr turns 18 I’d have double the projected 4-yr tuition costs for in-state schools here…
15k/year? Yeah that seems like overkill. Depending on your assumptions I think you could reasonably contribute ~700/month/child though.
I need more coffee. If I was behind, or felt like I was behind, on my retirement, then I might skip the 529 altogether.
You are correct. 10% penalty for non-qualified withdrawals, except in certain cases such as the child getting a scholarship. Then the gains are taxed as income tax. Contributions are untouched.
Yeah that makes sense. I’d not actually heard anyone suggest maxing the 529 before.
Yeah and if you max the 529 there’s no room to max the trust fund 
If you could swing maxing a 529 for 3-4 years early in a child’s life, you can just let it sit and be fine… I don’t think we will get to maxing IRA+401k+529 but if Mrs. & Mr. Rastiln made the same we probably would.
Thinking about it, I think technically the max 529 contribution is 30k, since you and your spouse both get a 15k gift freebie before gift tax, so that would REALLY be overkill haha
why put money in 401k when you can put it in penny stocks and be RECH
We started really small with our 529, like $100 or $150/mo when our son was born. So we have some catching up to do. Not sure I’ll ever actually get to maxing it, but I think we could max it and still be below what it would cost for a ‘typical’ degree at a state school. A number that is hard to pin down.
let it be known, when NIO gets to 100+, or, god willing, the same price as tesla, I can retire.
Same. Dropped in 1k to open I think then small payments thus far.
Another fun thing about a 529 plan is anyone can contribute. So if grandma wants to give a small child $20/50 etc an alternative is for her to put it in the 529 plan.
I started 529s for my 2 when they were babies. At HS graduation, there was enough in each to pay for about half of their undergrad. (don’t forget that you can pay their living expenses from the 529 as well)
Then my younger one went a different path and I wasn’t sure 529 could be used for her. So we dumped hers over to her sister and I’m paying oop for the younger one.
Whatever works. There is still a few k remaining. Older one might use it for her masters or save it for grandkids.
I’ve always been self directed in my investment decisions. When I started getting closer to what I thought might be enough banked to retire, I engaged the services of a financial advisor as a sort of peer review. It also helped reassure my wife that I was indeed being reasonably conservative with my assumptions.
I suspect I could probably guess reasonably well, but I’ll ask: what is your asset allocation?