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Old 07-31-2014, 12:22 PM   #21
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We saved for college in taxable accounts, but ended up paying from regular cashflow since our earnings were high at the time. We had two kids and they both went to in-state, public schools. They overlapped for one year, but even that was do-able from earnings. The excess balance in the taxable accounts enabled early retirement. My theory is: work hard, LBYM, build wealth, and don't try to predict FAFSA rules and the like, 20 years from now.
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Old 07-31-2014, 02:23 PM   #22
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Forbes has a series of articles on how to reduce college costs in general, including all the FAFSA tips and tricks.

"If you are the parent of a college-bound child—of any age–you should be thinking right now about how your family will finance the degree. The difference between doing it right and not doing it right could easily be worth between $10,000 and $200,000."

Paying For College: 21 Ways To Preserve Wealth - Forbes

I think that means $10K to $200K per kid. I highly recommend reading every article in the Forbes series on financial aid as well as saving on college costs in general and digesting all the ideas as early on as possible. The FAFSA loopholes are no different than learning the IRS tax code loopholes and taking advantage of legal tax code laws, like paying zero taxes on capital gains or tax loss harvesting.
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529 account restrictions
Old 08-06-2014, 03:44 PM   #23
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529 account restrictions

I have to disagree with some earlier posts regarding restrictions on 529 accounts. I opened up accounts for my girls 15 or so years ago, with Fidelity. I believe they were "New Hampshire" based (I don't live in New Hampshire), but that fact never had any impact.

I'm writing to say that we contributed to two accounts each month. Once the money was in, we could do whatever we wanted with it. But stocks, ETFs, mutual funds. Trade the stocks. I might have even written covered calls. There seemed to be no restrictions whatsoever; just like a regular brokerage account.
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Old 08-06-2014, 03:45 PM   #24
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Sorry. That would be "buy" stocks.
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Old 08-06-2014, 04:42 PM   #25
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Sakowitzm - I have two 529's with Vanguard. Since CA doesn't give any tax advantage - I didn't go with CA's plan. (I think mine is Utah or Nevada... I don't remember). I don't have unlimited fund choices - but enough to make it easy. I've got a portion in a target date type fund, and a portion in a vanguard S&P index fund. There are restrictions about how often I can change allocations/rebalance.... I think it's 4 times a year. I treat it kind of like my other funds - set an asset allocation, check the allocation quarterly or semi-annually, and rebalance if it's more than 5% out of my allocation.

Some folks are tied to their state plan because some states make 529 contributions state-tax-free. Unfortunately, CA is not one of those.
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Old 08-06-2014, 05:45 PM   #26
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I used UTMA-25 accounts for my kids. In some ways they are better than 529s because they don't have any restrictions on how the money is used, no documentation as I understand is required for the 529 withdrawals. I set it up to be available to them at 25 (I believe you can choose 18 to 25). So I was trustee until they became 25, then they took control. Can get them from Vanguard among other places. It is under their SSN so any withdrawals are theirs. They are the students assets so they might work against them seeking financial aid. These are my understandings, check with Vanguard or others for specifics.
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Old 08-06-2014, 05:53 PM   #27
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UTMA/UGMA may require annual tax returns while 529 plans do not. It just depends on how much taxable income is created in a given year.

And yes a UTMA is a student asset. For my kid, the school added the full value of the UTMA to the expected family contribution (EFC), so it was counted 100% against financial aid.

One does not need documentation for 529 plan withdrawals per se. if you want the gains to be tax-free, then documentation is relatively simple since colleges make 1098-T forms available just like you get a 1099-DIV from your financial institution.
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Old 08-12-2014, 08:27 PM   #28
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Thanks for all the replies. I think we will start by adding a roth ira in my wife's name. She works for a public college and has a 401a and 457 that she maxed out...that won't be an issue will it?

Is there a site that shows all the pre and post tax retirement options for people and ways to maximize it? I have not had great luck.
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Old 08-14-2014, 03:09 PM   #29
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The 529 account hasn't done all that great for me so I've been contributing to it minimally but intend to mostly pay from my taxable account or regular income at that time. Even contributing minimally ($100/mo) though the 529 account has about $8k in it now. I'm thinking in today's dollars my kid will need $20k per year!
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Old 08-14-2014, 08:36 PM   #30
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Originally Posted by dvalley View Post
The 529 account hasn't done all that great for me so I've been contributing to it minimally but intend to mostly pay from my taxable account or regular income at that time. Even contributing minimally ($100/mo) though the 529 account has about $8k in it now. I'm thinking in today's dollars my kid will need $20k per year!
I set my savings goals on published "budgets" from the two public universities near me - UCSD and SDSU. Then I extrapolate that they may go to another UC or CAL state school - so I include the dorm rates as well.

For UCSD, the website says you'll need close to $30k/year to go to school and live in the dorm. I assume it's similar for UC Berkeley and UCLA.
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Old 08-14-2014, 10:00 PM   #31
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I'm in Ohio and I like the Ohio College Advantage 529 plan. I mostly invest in the Vanguard Wellington option which made a good return last year, has low fees and every dollar is deductible from Ohio State Income tax that year up to $2,000 per kid with carryover into future years if you invest more.


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Old 08-21-2014, 01:06 PM   #32
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My babble, diversify investments, some 529 (although ours was the worst aspect of kid-college planning), IRA, taxable investment account, rental properties, essentially anything that can be an investment can go towards education…

And

Don't ignore life insurance. If you the "breadwinner" die before the kids finish college, you wisdom, and financial support disappears with you. We did term life insurance, smaller policies from a number of firms, vs one big policy. (Remember Executive Life, a big insurance company that went bankrupt.) And since Accidental Death & Dismemberment policies are even cheaper, we had those also… back when the kid was born, I figured I was healthy, and therefore the most likely way I was going to die "early" would be in an accident.

Non-investment thoughts.

- The local community college was significantly lower in per credit cost than the state university… it was the kids idea to get the first two years done cheaper & local, which also eliminated two years of "dorm" expenses…

- If the kid is good at tests, check into the CLEP policy at the desired colleges. For example, at the University of Arizona will accept up to 55 credits from CLEP tests.
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Old 08-21-2014, 01:16 PM   #33
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Originally Posted by columbus View Post
Thanks for all the replies. I think we will start by adding a roth ira in my wife's name. She works for a public college and has a 401a and 457 that she maxed out...that won't be an issue will it?

Is there a site that shows all the pre and post tax retirement options for people and ways to maximize it? I have not had great luck.
Didn't see this until today. You probably already contribute to your spouse's new Roth IRA there are no issues that I know of wrt 401(a) and 457. If your family income gets too high, then consider the so-called "Back door Roth" for both of you in order to keep contributing to your Roths. Google it.

As for all options, it may be time to read a book or two. Perhaps "The Bogleheads' Guide to Investing" goes over all possible options?
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