Janeway Posted April 17, 2019 Share Posted April 17, 2019 I have only saved money for college in regular investment type accounts. But now I am wondering if I should have education funds too. I know it is too late for my oldest, at least I think it is too late, but I am thinking about the younger ones. Quote Link to comment Share on other sites More sharing options...
regentrude Posted April 17, 2019 Share Posted April 17, 2019 (edited) Totally worth it. Earnings from a 529 will not incur federal taxes. Many states also offer a tax break from state tax on the contributions. Why would one want to leave this on the table? Edited April 17, 2019 by regentrude 5 Quote Link to comment Share on other sites More sharing options...
TechWife Posted April 17, 2019 Share Posted April 17, 2019 A 529 is well worth it for all of the reasons regentrude stated. Quote Link to comment Share on other sites More sharing options...
madteaparty Posted April 17, 2019 Share Posted April 17, 2019 It’s only worth it to us bc there’s a state tax benefit. Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted April 17, 2019 Share Posted April 17, 2019 We chose other types of investments, as the "cons" (which you can read about by doing a search) of 529 plans weren't worth it to us. I can understand why others like them, though. 2 Quote Link to comment Share on other sites More sharing options...
Condessa Posted April 17, 2019 Share Posted April 17, 2019 This thread reminded me that I had been meaning to open some 529 accounts for our kids, which I just did. I've hesitated in the past over concerns about having saved funds inaccessible for other uses, but I finally set it up so we now have some going to 529s and some going to regular accounts. (Probably some and possibly all of my kids will have large non-qualifying expenses for religious missions either just before or early in their college years, so we need to be working on non-college dedicated savings for them, too). Quote Link to comment Share on other sites More sharing options...
DawnM Posted April 17, 2019 Share Posted April 17, 2019 4 hours ago, Pawz4me said: We chose other types of investments, as the "cons" (which you can read about by doing a search) of 529 plans weren't worth it to us. I can understand why others like them, though. We did the same. We currently have 2 in college and it has worked out well for us, but would have worked out well the other way too. 1 Quote Link to comment Share on other sites More sharing options...
Frances Posted April 18, 2019 Share Posted April 18, 2019 Our state tax subtraction in a high personal income tax state makes it worthwhile, even if you only put the money in right before each tuition payment is due and then pull it out to pay the bills. 1 Quote Link to comment Share on other sites More sharing options...
Janeway Posted April 18, 2019 Author Share Posted April 18, 2019 20 hours ago, regentrude said: Totally worth it. Earnings from a 529 will not incur federal taxes. Many states also offer a tax break from state tax on the contributions. Why would one want to leave this on the table? i am also confused about where to take the 529 from. When I called around to a few places, they would say they use the one from this state or that. Can you please point me in the direction to start? Quote Link to comment Share on other sites More sharing options...
regentrude Posted April 18, 2019 Share Posted April 18, 2019 22 minutes ago, Janeway said: i am also confused about where to take the 529 from. When I called around to a few places, they would say they use the one from this state or that. Can you please point me in the direction to start? well, I think you would start with YOUR state. Quote Link to comment Share on other sites More sharing options...
Riverland Posted April 18, 2019 Share Posted April 18, 2019 (edited) We did not use 529's because we like to invest in other areas like real estate. Then it turned out that our son received merit scholarships/stipends/fellowships that covered most of his education expenses, BS through PhD. If I was to set one up though, I would take into account Clark Howard's advice as to which state to use (which is NOT necessarily the state you live in): https://clark.com/education/clarks-529-plan-guide/ Edited April 18, 2019 by Riverland 3 Quote Link to comment Share on other sites More sharing options...
Bootsie Posted April 18, 2019 Share Posted April 18, 2019 13 hours ago, Frances said: Our state tax subtraction in a high personal income tax state makes it worthwhile, even if you only put the money in right before each tuition payment is due and then pull it out to pay the bills. Are the deposits made into the plan tax deductible in your state for state income tax purposes? At the federal level it is the earnings on the money that is tax-free, not the initial deposit that is tax deductible. Quote Link to comment Share on other sites More sharing options...
madteaparty Posted April 18, 2019 Share Posted April 18, 2019 8 minutes ago, Bootsie said: Are the deposits made into the plan tax deductible in your state for state income tax purposes? At the federal level it is the earnings on the money that is tax-free, not the initial deposit that is tax deductible. In my state yes. Which is what makes it worth it. 1 Quote Link to comment Share on other sites More sharing options...
Frances Posted April 18, 2019 Share Posted April 18, 2019 12 minutes ago, Bootsie said: Are the deposits made into the plan tax deductible in your state for state income tax purposes? At the federal level it is the earnings on the money that is tax-free, not the initial deposit that is tax deductible. Yes, up to a certain amount each year with four years of carry forward, that’s what makes it worthwhile to do even if you don’t save in advance. Quote Link to comment Share on other sites More sharing options...
Lawyer&Mom Posted April 18, 2019 Share Posted April 18, 2019 (edited) 1 hour ago, regentrude said: well, I think you would start with YOUR state. Not necessarily. You can use a 529 program from any state. We use a highly rated program from a different state. (But we don’t have state income tax, so that doesn’t impact our decision.) Edited April 18, 2019 by Lawyer&Mom 1 Quote Link to comment Share on other sites More sharing options...
Janeway Posted April 22, 2019 Author Share Posted April 22, 2019 On 4/18/2019 at 8:32 AM, regentrude said: well, I think you would start with YOUR state. That is not how it has worked. For example, I started with calling USAA, which is based in Texas and we have. But they use something from Nevada. They are the ones that told us we would want to research the various states to decide which program we would want. Quote Link to comment Share on other sites More sharing options...
kiwik Posted April 22, 2019 Share Posted April 22, 2019 Only if you still have enough to eat and pay the bills and have no high interest debt. Quote Link to comment Share on other sites More sharing options...
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