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    #16
    Originally posted by disneysteve View Post
    True, though there are certainly advantages to 18 years of tax-free growth followed by tax-free withdrawals.
    While I agree with that, I have a friend whose daughter's 529 lost 30% the year before she went to college back in 2008. Supposedly the 529 plan was going to move her money into safer investments but they weren't safe enough. We like control of how our money is invested and didn't trust the companies who managed the 529s.

    529 plans started in 1996. Our oldest was born in 1995 and back then, 529 plans were too new for us. Maybe we are too conservative. We didn't have 18 years.

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      #17
      Originally posted by sblatner View Post
      While I agree with that, I have a friend whose daughter's 529 lost 30% the year before she went to college back in 2008. Supposedly the 529 plan was going to move her money into safer investments but they weren't safe enough. We like control of how our money is invested and didn't trust the companies who managed the 529s.

      529 plans started in 1996. Our oldest was born in 1995 and back then, 529 plans were too new for us. Maybe we are too conservative. We didn't have 18 years.
      I controlled how my money was invested in our 529; it was not managed by the company.

      For those of you that have not used a 529 and have a state tax deduction or credit: You can open a 529 and deposit and withdraw funds in the same year and get the benefit. In Illinois, that gives you an automatic return rate of 4.95% on up to $20,000 depending on your filing status.

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        #18
        My husband and I have a daughter who is almost 3 and another baby on the way. We have decided that we're not going to contribute to 529s just yet. We'd rather take care of other financial priorities first, and wait until we're closer to having to pay for college to start ear-marking money for it. It's hard to guess what higher education will look like in 15 years, let alone what it will look like for our kids specifically. At this point, we would have to cut back on our retirement contributions to save for college. I figure that if we save aggressively for retirement now, we can cut back to save for other priorities (like college) later. When we get to the point where we have money left over after maxing our retirement savings, we'll reevaluate whether or not its time to put money into 529s.

        We do have a 529 for our daughter and will open one for the new baby. But, we have just been funding that with gift money.

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          #19
          Originally posted by sblatner View Post
          I have a friend whose daughter's 529 lost 30% the year before she went to college
          Sorry, but that isn't the fault of 529 plans. How much risk you take in any investment is entirely up to you. If your friend was that aggressive with a senior in high school, that was his fault.

          I had my daughter's 529 invested very aggressively, but as she got closer to college age, I gradually dialed back the risk and moved into more conservative investments so that we wouldn't have any big dips when we needed the money. It's no different than how I've managed our retirement accounts. We are hopefully within 10 years of retirement and our asset allocation today is more conservative than it was 5 or 10 years ago. A 529 should be handled the same way.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

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            #20
            I think back then, the plans were in charge of the investing/risk and were supposed to move the funds to safer investments as the kids approached graduation. The investor did not have control. That is one reason we did not invest. Remember, this was over ten years ago.

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              #21
              Originally posted by sblatner View Post
              I think back then, the plans were in charge of the investing/risk and were supposed to move the funds to safer investments as the kids approached graduation. The investor did not have control. That is one reason we did not invest. Remember, this was over ten years ago.
              True. 529 plans have gotten more flexible and lower cost over time. Not great, but definitely better. I can't say there was much I liked about the 529 options when we first had kids 14 years ago.

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                #22
                Originally posted by sblatner View Post
                I think back then, the plans were in charge of the investing/risk and were supposed to move the funds to safer investments as the kids approached graduation. The investor did not have control. That is one reason we did not invest. Remember, this was over ten years ago.
                That might be true, or at least for the plan he was in. We started our 529 around 2001 I think and we definitely had control over our investment choices. That was 16 years ago.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

                Comment


                  #23
                  Originally posted by disneysteve View Post
                  I had my daughter's 529 invested very aggressively, but as she got closer to college age, I gradually dialed back the risk and moved into more conservative investments so that we wouldn't have any big dips when we needed the money. It's no different than how I've managed our retirement accounts. We are hopefully within 10 years of retirement and our asset allocation today is more conservative than it was 5 or 10 years ago. A 529 should be handled the same way.
                  I agree in general principle, but I would argue that a 529 should get even more conservative than a retirement account unless you plan on having money left over to pass on to another kid. I figure at the time you retire, some of the money needs to be used right away, but much of it could have another 20+ years before you touch it. But, at the time a kid enters college, all of the money should be used up in about 4 years, maybe a few more if it's going to go towards grad school too.

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                    #24
                    We started out investing in savings bonds as they didn't have 529's when we first started saving for college. We were able to cash in the bonds and purchase a prepaid tuition plan when they rolled that out in our state. We also invested in a regular 529 to cover the cost of room and board and books.

                    The prepaid tuition worked out well for us as DS attended one of the most expensive in-state colleges. It paid over double our investment (we purchased the plan about 4 years before DS started college).

                    The regular 529 plan was age based evolving plan (mostly bonds when we started it) and did not earn very much, but also didn't lose value when the market tanked (DS graduated high school in 2006). Mainly, the benefit we received was a state tax deduction for contributions (about 5%).

                    It was very handy to have the money set aside for college. It was really easy to use. When DS first started attending we were able to use a CC to pay for room and board and then file a voucher to get the 529 money to pay the CC. (The prepaid tuition part was paid directly to the school.) But, then the school started adding a surcharge on to CC payments, so we stopped doing that.
                    After that, we would get the bill, file the voucher and then pay. I don't know if this has changed, but our 529 didn't require us to submit any bills in order to get paid. The only requirement was to keep the bills with our taxes in case of an audit.

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                      #25
                      We do the coverdell ESA $2k/year per kid. DK1 has $22k and DK2 has $15k ages 5 and 7. Trust me I'm feeling tremendous guilt because I feel like we should have more saved to cover 4 years of public university tuition.

                      But we have a lot of things to cover right now and I feel like we have to focus on us and our retirement first. Then we'll get focused on college. I think in another year or two we'll finalize our expenses and then we'll be able to focus on saving more. I think $5k for 5-6 years should probably do most of the heavy lifting but I could be wrong. This is really difficult to predict. Plus we really do have a lot of things to tie up before we get college settled.

                      In some ways I almost feel like cash flowing college will have to be the solution. Mostly because even if you save a lot it still could end up not being enough which is stressful to think.
                      LivingAlmostLarge Blog

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                        #26
                        Originally posted by LivingAlmostLarge View Post
                        We do the coverdell ESA $2k/year per kid. DK1 has $22k and DK2 has $15k ages 5 and 7. Trust me I'm feeling tremendous guilt because I feel like we should have more saved to cover 4 years of public university tuition.

                        But we have a lot of things to cover right now and I feel like we have to focus on us and our retirement first. Then we'll get focused on college. I think in another year or two we'll finalize our expenses and then we'll be able to focus on saving more. I think $5k for 5-6 years should probably do most of the heavy lifting but I could be wrong. This is really difficult to predict. Plus we really do have a lot of things to tie up before we get college settled.

                        In some ways I almost feel like cash flowing college will have to be the solution. Mostly because even if you save a lot it still could end up not being enough which is stressful to think.
                        Have you looked into the GET program? They recently opened the program back up. It costs $113 per unit. (100 units =1 year at UW, which is the most expensive public college. The other colleges require fewer units per year. )
                        It has been a pretty fair program from what I've seen. If your child goes out of state or to a private school they get the same payout as if they went to a public college.
                        http://www.get.wa.gov/sites/default/...e-10-17-17.pdf

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                          #27
                          Thanks again for all the info. I started a 529 but would like to limit to Php10K contribution x 4 years. Then, start another one for the other but do 5 years on that.

                          The 529 is on an age-appropriate bracket 11-13. Does this mean when he turns 14 I have to move it manually to the next age investment allocation bracket or is this already factored by the account automatically?
                          Kill the debt, before it kills you!

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