529 plan, soon to be dad

[jIMOh]

You have not stated the goal for using the 529... to pay for some of child's education, pay for most of it, or to pay for all of it.

My suggestion is along lines of other posters:

1) fund retirement accounts and HSA's to max
2) the part I did not see was a projection of whether all of above is enough...
2a) consider a taxable account for some investments to supplement retirement accounts
3) make sure house is paid for by time child starts college
4) fund 529 plans

My suggestion is this:
It is better to get the federal tax credits for education (if you qualify) by paying "cash" for some of college the year the costs are incurred than to be restricted with a 529 plan.

By having a taxable investment account and a paid for house, you have flexibility... for example if mortgage is $1500/mo and is paid off when child turns 18, you can use that $1500/mo to fund college education that year, and get some possible tax credits to boot.

You should analyze the savings of the tax credits (hope or lifetime learning) relative to the state tax savings of a 529 plan.

 

[jIMOh]

Can you verify this?

Here's what my 529 plan says in response to the question "what are qualified expenses?":

"These are expenses incurred for college such as tuition, fees, room, and board. Qualified expenses even include a range of things such as supplies and equipment that the institution requires the student to obtain as a condition of attendance. Net earnings in your 529 account are tax free when used for these expenses at an eligible educational institution."

My take is that basically everything that the colleges include in the estimated cost of attendance is "qualified" except "misc" and travel/transportation (and beer money).

I'd like to know, since these would dramatically impact my method of college savings.

edit: nevermind - I see my question has been answered. I forgot to refresh the thread for a few hrs and got distracted.

The expenses eligble for the federal tax credits, and the expenses eligible from a 529 (I should probably use the term qualified expenses) are not the same list.