college fund

smileybabyboy · October 2013

Anyone start a college fund? We have not and I'm getting annoyed DH hasn't even started exploring that yet. We live in central mass, anyone know of any company we should try? Thanks.

DawnLilly · October 2013

We have a 529 plan that BIL and we contributed to. It's held by a firm called Waddell & Reed. I've been very impressed with them. BIL did all the research and set it up for DS's first birthday present. We can contribute more at any time. There is no limit. DS will be able to use it for anything education related so he could use it to pay for a CDL, transportation to school, a certificate in agriculture, standard university or for an apartment. It's also transferable so we can use it for another child if he doesn't need it.

newenglander71 · October 2013

We started a 529 plan when DS was a month or 2 old.

allardr · October 2013

I dont' know how all that works, so we just opened a savings account when she was first born. We put money in it each week and all her holiday money from cards go in it.

casester1015 · October 2013

You should definately use a 529 account. It's like an IRA for kids. The money doesn't get taxed so it's better than using a normal savings account. Just about any financial institution should offer one. You can just google it and I'm sure you'll get options for your area.

salbabe79 · October 2013

gerber has a college fund

smileybabyboy · October 2013

I was about to ask if it was taxed, thank you.

DawnLilly · October 2013

casester1015 said:
You should definately use a 529 account. It's like an IRA for kids. The money doesn't get taxed so it's better than using a normal savings account. Just about any financial institution should offer one. You can just google it and I'm sure you'll get options for your area.

This. But an actual educational IRA, IMO, is not a good way to go because it is very strict on what it can be used for (tuition/books), and has contribution limits. However, if for some reason you think your LO would be attending a private school before secondary education an educational IRA (Coverdell Savings accounts are I think what they are called now) could pay for that where a 529 will not.

allardr · October 2013

Just a side thought too, if a child doesn't go to college I think there is a huge penalty when taking the money out of a 529 then for other uses.

gigantan · October 2013

We looked into this and decided our state's 529 plan was the best option for us. In NY, any contributions up to 10K are tax deductible so we thought with the tax shelter towards education as well as the tax break on our income taxes was out best bet. Each state offers a 529 plan and you can participate in other state plans if you do not like your state plan however, I believe only those that live in the state will benefit from the particular plans' tax advantages.

It is better to put your money in an account like a 529 plan or any other college IRA than a traditional savings because the interest earned will most likely be double/triple the interest of a traditional savings account.

All this aside, I wonder if things will change by the time our LO's get to college. Will education still be so astronomically high, or will this bubble burst as the housing market did a few years ago? The prediction is that our kids education will run somewhere from $150K-$200K for a traditional 4 year education however, who can afford this per child?? Especially when average earned incomes are not increasing. Sorry for the tangent, however, I take this thought into consideration when setting aside $$ for LO. I want to save enough, but not too much that may potentially go unused if things should change.

CurlyQ284 · October 2013

We have a 529 that I opened when he was born.

GreenMonkey1 · October 2013

We have a 529 for DS, our financial planner recommended a Blackrock account and we've been happy. She set it up and we contribute a portion monthly (direct withdrawal from our bank account) plus add gift money he receives.

My brother had a 529 and my parents/him were able to withdraw money from it for fairly liberal educational costs - like if he needed a new laptop for school. I think he was even able to use some of it for living costs while he was in college (not definite on this one, would have to ask a financial planner).

Plus, many 529 plans are transferable from one child to another. My understanding is if DS didn't use it all I could transfer the money to LO #2 or even to my niece/nephew.

A good financial planner can run through the different options in Massachusetts and help you select the one that works best for your family.

@gigantan I work in higher education and I think the bubble will burst regarding tuition. Not sure how it will look, but like the house market, something will give. God willing, if it really costs $200 K for a kiddo to attend college by the time my son is grown we and a lot of families will be in a bind.

aylafsu88 · October 2013

We started a 529 for LO when she was born. Our family lawyer recommend it and after doing research H agreed. Like GreenMonkey1 mentioned it can be used for anything related to college (housing, car, laptop, books etc) so the restrictions are liberal.

meglette417 · October 2013

If your LO doesn't go to college you will get hit 10%. We have not opened a 529 planned, we did consider it, one financial person actually told us just to keep investing in the stocks we have. I haven't done the complete numbers and think it would be hard to do but my aunt has a 529 for her kids. She mentioned the tax break but said from an interest point she isn't making that much. We make a decent amount in our stocks so we figured we would keep money in there.

melody921 · October 2013

We have a 52. We went with the Virginia plan, even though we live in PA (I can't remember all the reasons why anymore, lol). We started one for each kid shortly after they were born.

smileybabyboy · November 2013

Do any of these plans affect financial aid?

SunAndRain · November 2013

Honestly, I would talk to a financial planner. Find one through a personal reference from someone successful and intelligent who is your parents' age or older. We found ours through a friend who is a mortgage broker and have been a client of hers for nearly 10 years now.

529 may or may not be your best option, depending on your circumstances. Equally important is to understand the tax implications for your choices. For us there were other options that worked in our favor considering the rest of our retirement planning and other financial goals.

I know some people like to research this stuff on their own. My feeling on that is that 1) I don't have time and 2) given the amount of money we're talking about here, making a mistake could be VERY costly.

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