college savings for kids

[CaliforniaMan]

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.

 

[LOL!]

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.

 

[columbus]

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.

 

[dvalley]

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!

 

[rodi]

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.

 

[Al in Ohio]

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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[unno2002]

[FONT=&quot]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…[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]And[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]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.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Non-investment thoughts. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]- 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… [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]- 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.[/FONT]

 

[LOL!]

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?