bja1234
Dryer sheet wannabe
They were equal when you funded the accounts. The End
.... BTW, You CAN withdraw the money you put into the 529 without penalty and then just let any interest ride for others ((or transfer the 5299 to yourself and take some classes!)
In a recent conversation with Vanguard on withdrawals, I was told I could not take out only contributions, it was all pro rata. So, some amount would be taxable.
Haven’t confirmed with IRS publications, but what I was told fits with the policy of making sure everything gets taxed, even if just a bit[emoji6]
Interesting. Is there protocol for determining how much is contributions and how much is growth? For example, I one puts in $25k and it grows to $40k and $35k is used for education costs, is the remaining $5k unused contributions or unused growth?
We funded their Roths.I also funded my 2 kids' UTMA since their birth. By the time when both graduated, one left with a large balance. The other kid had summer intern and part time work and still short of few thousands which I funded from my checking. They do not know their balance all along and only know they had an education fund. I do other things to balance the difference.
So the issue of inequality is in your mind, unless you actually told them the balance.
If you feel the elder son is short changed, and you have sufficient funds in your checking, I would fund his Roth IRA and HSA if he is eligible. Do it few times until he received enough to match his brother's balance.
This turns out to be a typical first world "problem." The kind of problem it is good to have...
I am not sure anything at all needs to be done, or can be done or should be done about this situation between my two sons, but it points up the effects of different life choices and SEQUENCE OF RETURNS effects, and the power of compounding---
Betweeen UTMA and 529 accounts, I saved up what were essentially equal, sizeable amounts to fund my two kids' educational choices. The older one went to school 3 years earlier, to a slightly more expensive private school and then also attended graduate school As a result of that, and because he began school fund withdrawals in the midst of the big market recovery, he ended up using up all of the money in his name. No worries. He has a great job, great salary, etc.
Meanwhile, the younger son is scheduled to graduate in May 2020 and even if he were to go to graduate school, which he is not considering at present, will wind up with A LOT MORE money in the UTMA, thanks largely to Mr Market and the timing of withdrawals after the big run up, as well as slightly lower tuition expenses. I did put a little more into the younger son's account early on -by mistake- and the compounding certainly has paid off for him. And the 529 will not even be anywhere near depleted.
I know I can reassign the 529 to a future grandchild or even to my own qualified educational expenses if I so desire-- or take the 10% penalty and pay the taxes if I really want to... but probably won't do that latter thing.
So should I encourage my son to do anything to "even things out?" . Or is this just the way the cookies crumble and there is nothing to be done?