I know there are college savings plans out there but what financial moves should we be considering now to ensure they are in a good position in the future wether it be for college, trade school, first home,etc…

For those with 529s are y'all considering the government making tuition free in the future? Just curious

What are some of the better 529 options out there?

_lefraud_ said:

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What are some of the better 529 options out there?

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I just went with Vanguard for ease of use.

Works well, good options and easy to share contribution code

Whenever someone asks for birthday or Christmas lists I be sure to include it

My in-laws are the same. Clothes, fancy tea sets, expensive clothes, would rather some college money personally but I won't be picky

Same story with MIL. New toy and something every week for the rascals. Won't be picky. Thankful for her kindness and generosity. Godmother contributes to the 529 though so that's a win.

This is brand new, so had to research it. Seems it may not be something to hang your hat on as there are a lot of restrictions.

Some of the restrictions include:

- A $35,000 lifetime cap on transfers.
- Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
- The rollover can only be made to the beneficiary's Roth IRA not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child's IRA, not the parent's.)
- The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
- Accountholders can't roll over contributions, or earnings on those contributions, made in the last five years.

Something fun we did was open an investment account and started putting in $13.22 every month. Called it our "Proverbs 13:22 Fund." The proverb will explain it.

10andBOUNCE said:

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Something fun we did was open an investment account and started putting in $13.22 every month. Called it our "Proverbs 13:22 Fund." The proverb will explain it.

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We did the same, but named it "John 11:35 Fund"

Because I wanted flexibility later, we elected to both start backdoor Roths rather than a 529 for ours. Now if we had already been maxing that out, different story. But damn, these kids are expensive.

BDJ_AG said:

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This is brand new, so had to research it. Seems it may not be something to hang your hat on as there are a lot of restrictions.

Some of the restrictions include:

- A $35,000 lifetime cap on transfers. Per account per beneficiary. The statute does not limit the number of accounts that a beneficiary can receive from or the number of accounts an owner can establish. So each parent can give to each kid.
- Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
- The rollover can only be made to the beneficiary's Roth IRA not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child's IRA, not the parent's.)You can make yourself your own beneficiary. Or your spouse. Or both. That's $140k combined.
- The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
- Accountholders can't roll over contributions, or earnings on those contributions, made in the last five years.

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Interesting, I defy need to research more. What about the potential clock reset on changing beneficiaries and the $6500 limit each year?

Like I said before I know virtually nothing about this, so there are likely many ways to maneuver through it…I was simply cautioning that it may not be as simple as "You can flip your 529s to a Roth if you've held it for 15 years so you do have an out now." That statement makes it appear seemless and you can just do a lump sum xfer from your 529 to your Roth account. Before anyone dives head first into that new "out" they should likely do more research.

Some research with a link to the legislation included:
https://texags.com/forums/57/topics/3352197

I am not an expert, I just spent an afternoon researching the Secure 2.0 legislation to report to the other partners at my firm of the likely impact on our retirement plan.

aggiebq03+ said:

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Here is some of what we did, in no particular order:

Get term life insurance if you don't already have any. Depending on age and career outlook you may pick different time, but we went with 15yr and 8x salary for both me and my wife. Was like $50/month each as we were late 20s and in good health.

Set up a 529 and save monthly, even if it's a small amount. Like $50-100/ month to start is fine. Just to get in the habit. Set it and forget it until you can add more later.

Get a will in place, so you know who will take care of your kids in a worst case scenario.

Never forget to spend time with them. It goes by and you can't get it back.

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A lot of really good advice here. To me it isn't so much whether money is put in a 529 or Education Savings Account or whatever, the most important thing is, as you say, to get in the habit of putting something aside every month. Incomes will go up and then the monthly amount can be increased as it does. We set up automatic drafts in the amounts you mention for each of our three children. That way you never forget to fund the account(s) each month. After our oldest finished college, there was still $30,000 left over and she used that as the down payment on her first home. She was a single mom and with the large down payment she was able to get a nicer house with a payment she could live with.

As to the OP, starting all this so early is excellent. Before you know it, it will be time to write the check for that first semester and you will be so glad you did this!

Red Pear BCS Luke said:

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Dill-Ag13 said:

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I did all of this. $200/month into a 529 will get you to about 75% coverage on an A&M education

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If you can convince Grandmas and Grandpas to hold off on buying tons of gifts and instead just help you make bigger lump sum contributions to the 529 for the fist couple of years - it'll be a great way to capture more compound interest earlier for that little egg grow bigger by the time college rolls around. (Side Note: I was not successful with my MIL on this - who just buys books and clothes unending every month)

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As one of those Grandpas, that is what I have done. We have four grandchildren (the oldest just finished her first semester at A&M) and as each one came along, instead of more junk/toys/clothes/etc. at Christmas, I bought them stock or mutual funds. And again on birthdays. I did the same amount for each grandchild. They still got some toys and stuff from us, but not like you often see. My thoughts were that on Christmas morning with all the gifts from everyone, a few less would never be missed and it was comforting for me to know that there would be a decent pile of funds when they went off to college, even though I would not be around to see it.

Probably redundant with others, but this is what we do and have done for our 3 kids ages 5, 4, 2:

Term life insurance policies for both wife and I

Will/trust in order

529 for each kid - $600/month per kid (this hurts, but I can always scale it back later)

UTMA account for each kid - all birthday/Christmas money goes in here and invested. Once they are old enough, I will allow them to take more ownership in investment decisions. They don't receive any crazy monetary gifts, a couple hundred dollars here and there, but my 5 yo already has nearly $8,000 in his UTMA!

We do pretty much the same amount for our two young kids. The earlier the $$ goes in the more time it has to appreciate. Only real advantage of the account is tax free capital gains, so might as well front run it and then pull back when they get older.

if you have enough extra cash to be loading up all of your own personal retirement vehicles and have leftover cash to overfund the 529, I would agree with you. Good position to be in.

Diggity said:

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Killin Me Smalls said:

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Probably redundant with others, but this is what we do and have done for our 3 kids ages 5, 4, 2:

Term life insurance policies for both wife and I

Will/trust in order

529 for each kid - $600/month per kid (this hurts, but I can always scale it back later)

UTMA account for each kid - all birthday/Christmas money goes in here and invested. Once they are old enough, I will allow them to take more ownership in investment decisions. They don't receive any crazy monetary gifts, a couple hundred dollars here and there, but my 5 yo already has nearly $8,000 in his UTMA!

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that seems...excessive

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lol, it might be enough for a four year degree, not enough for five years or graduate work. Unless the accounts have some pretty nice returns over the years.

Smart and you are lucky to be in a position to do so. Good for you

This just came across my email this morning related to the "Secure Act 2.0" that passed by congress at the end of the year.

529 Plan Updates

• After 15 years, 529 plan assets can be rolled over to a Roth IRA for the beneficiary, subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000.