So I was on another FIRE forum and someone had commented that it wasn’t advantageous to invest in a 529 if you plan on retiring early. Rather, just throw that money into a brokerage account since you can plan your withdrawals to be tax free anyway, and without the limitations of a 529 (having to use it for education). Now I think whether this strategy is advantageous will be dependent on your individual facts and circumstances as there are many factors and considerations at play (is it likely my child will even utilize the account, state tax benefits, ability to convert a portion into a ROTH courtesy of the SECURE Act, etc.).
Looking at my own situation though, I am on track to FIRE in my mid 40s (currently 36) with a healthy mix of pre/post-tax retirement accounts and a taxable account, so I should have plenty of years to convert my pre-tax accounts at favorable tax rates or even completely tax-free. I currently have about $22k in my child’s 529 and was planning to open another one when my 2nd kid is born later this year, but now I’m second guessing whether I should just max out each of my kids’ 529 plan at $30k (the amount allowed to be converted into their future ROTHs) and throw any excess into my taxable brokerage. I live in a state with ~3% income tax so there is marginal benefit there, but not sure if that alone is worth losing the flexibility that comes with investing in a taxable account vs. a 529.
Hoping to get some advice/insight from the community on whether there are other considerations I should be taking into account or if others here have performed a similar analysis.
Looking at my own situation though, I am on track to FIRE in my mid 40s (currently 36) with a healthy mix of pre/post-tax retirement accounts and a taxable account, so I should have plenty of years to convert my pre-tax accounts at favorable tax rates or even completely tax-free. I currently have about $22k in my child’s 529 and was planning to open another one when my 2nd kid is born later this year, but now I’m second guessing whether I should just max out each of my kids’ 529 plan at $30k (the amount allowed to be converted into their future ROTHs) and throw any excess into my taxable brokerage. I live in a state with ~3% income tax so there is marginal benefit there, but not sure if that alone is worth losing the flexibility that comes with investing in a taxable account vs. a 529.
Hoping to get some advice/insight from the community on whether there are other considerations I should be taking into account or if others here have performed a similar analysis.