Starting a Grandkids College Fund

[eytonxav]

We let our son and his wife select the 529 plan and we contribute to it.

This is the approach we will take, let the parents choose a 529 plan or some other investment account that they control on behalf of our grandchild.

 

[misanman]

This is the approach we will take, let the parents choose a 529 plan or some other investment account that they control on behalf of our grandchild.

Be aware that funds under the control of the parents may have to be included if they apply for student aid (FAFSA). Funds under the control of grandparents do not need to be included. I believe that a withdrawal from a 529 may also have to be included so it may be advantageous to delay withdrawals until the 3rd or 4th year.

 

[eytonxav]

Be aware that funds under the control of the parents may have to be included if they apply for student aid (FAFSA). Funds under the control of grandparents do not need to be included. I believe that a withdrawal from a 529 may also have to be included so it may be advantageous to delay withdrawals until the 3rd or 4th year.

Thanks, I did not realize that, need to review the rules governing these accounts.

 

[SecondCor521]

Thanks, I did not realize that, need to review the rules governing these accounts.

And by the way, just to make things more complicated, the rules are in the process of changing in this area (both FAFSA generally and how grandparent 529 withdrawals are counted). Google "FAFSA simplification" for details.

 

[Dash man]

We’ve opened 529 accounts for our three grandkids and the two kids of a nephew who passed. We also opened custodial accounts for them. In Pennsylvania we can deduct 529 contributions to any state’s 529 plan. The 529 funds can also be used for trade schools and K-12 schools, not just college. If any of the kids don’t use it, there are plenty of other nieces and nephews with kids to use the money, or great grandkids later on. It can be passed down for generations.
The custodial accounts aren’t for college, but for a starter home or other need when they get older. The 529 plans get most of our contributions. Our intent is to have enough to fund four years at Penn State. If they need more it’s on them. If less, they can pass any excess on to their kids.

 

[SecondCor521]

room/board (rent/sundries) is limited to the "Cost of Attendance" for room and board published by that college. That page needs some serious updating for one of my son's universities - rents have gone up far faster than that page reflects.

Sounds like the web page is out of date.

You should be able to contact the financial aid office and ask them for the COA for the current term for room and board for your son's living arrangement. It's a sort of uncommon request, but if you persist usually you'll end up talking to the right person and they'll get you the latest numbers.

This may help you get more qualified 529 expenses for his R&B than the outdated web page numbers currently do.

 

[brett]

We have an account where we deposit $3000. per grandchild per year since birth. The monies are in our name. They are all under 7 years of age. Currently only one of our two children are married w/children.

We also have a provision in our respective wills. First cut of the estate is $100K per grandchild for post secondary edu. It is take of leave basis and it is in addition to the above.

We review/update our respective wills every five years and will make any adjustments as necessary. Post secondary edu costs have been, and are expected to continue, to increase at a faster rate than inflation.

Our goal is to fund post secondary edu for any grandchild that wants it. Independent of what their parents may or may not be able to fund.

 

[misanman]

Just thought I should add that we started the 529s when our first grandchild was born. Didn't really dream there would end up being 10 of them (two sets of twins) but wanted to treat all of them equally. It turned out to be more than we initially expected but we are really glad we did it.

 

[athena53]

Just thought I should add that we started the 529s when our first grandchild was born. Didn't really dream there would end up being 10 of them (two sets of twins) but wanted to treat all of them equally. It turned out to be more than we initially expected but we are really glad we did it.

DS is an only child so I doubt I'll end up with 10! They have 3 and he's making noises about a fourth although I know he'll respect DDIL's opinion. She'd previously said she didn't know if there would be enough of her to go around with a 4th since she's a SAHM and home-schools. If they do end up with a fourth I may have to cut back my travel budget.

 

[imnontrad]

1) I can deduct my contribution from my state income taxes (resulting in $0 due the past 2 years
2) They can use it for college, tech school or pass on to their kids
3) I can withdraw my contribution without penalty
4) For the grandchild who may be disabled and not able to go to college/tech school, the money can be transitioned to an ABLE account for his care.
5) Because the account is in my name with them as the beneficiary for the funds, the money is not counted on a FAFSA application.

 

[KarenF]

We have 529 plans for our 3 grandchildren. Hopefully, they will use it for college, but it can be transferred to another relative if needed. One of our grandchildren is going to a private christian school for high school, but her parents are paying for it. I believe that the 529 plan could be used to pay for the private school also.

One of our son's did not use all his 529 money (scholarships). I filled out some forms and transferred it to his wife. She is a teacher and can use it for classes she needs.

 

[SecondCor521]

We have 529 plans for our 3 grandchildren. Hopefully, they will use it for college, but it can be transferred to another relative if needed. One of our grandchildren is going to a private christian school for high school, but her parents are paying for it. I believe that the 529 plan could be used to pay for the private school also.

Yes, K-12 private school *tuition* is a qualified expense up to $10K per kid per year.

 

[Librarian]

529 is what my inlaws did

For their 14 children.

They did this all at the same time...so not surprisingly the younger children have a much larger pool of $ by the time they went to college. No ones fault, it is what it is.

Our experience:
27 YO: 4 years private college (1/2 tuition scholarship) plus 2 years grad school (state college but out of state...tho somehow he got in-state tuition for the 1st year). 529 did not quite cover all tuition, room & board for 6 years.

24YO: 4 years private college (3/4 tuition scholarship). She still has about 40% of what she started with. She plans to leave it, assuming she has her own children one day.

22YO: 4 years state college. After paying for 3.5 yrs of college he has as much left as the other 2 started with! (state college & TIME). He also plans to leave it assuming he has his own children one day.

If the younger 2 do not have children, they may roll it over into their own portfolios. They will pay a penalty, but it isn't as bad as I thought it is.

I did encourage them to take 8 hours of grad school...if they do, they may withdraw to pay for tuition as well as housing & food. A wiser way to withdraw if they are planning on grad school.