T Durden said:

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How would the IRS know what all you use the 529 or ESA account money for? Do you save all the receipts and report it on your tax return?

Like if you bought a laptop on your credit card. How do you report it? What if you bought a boat instead?

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It's an honor system thing unless you get audited.
Safest option is to send money direct to educational institution since you never touch the money. Otherwise you need to be prepared to show proof if asked about it.

Thanks. For whatever reason my daughter's college doesn't allow it or Vanguard ESA doesn't allow for direct payment. It's annoying.

Holistic Planning said:

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LeftyAg89 said:

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I think most on here have been recommending Utah's so I went with that 5 years ago: my529.org

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We exclusively use this for our new 529 plans. Great interface, low costs also allows for a debit card to make it easier to use for things like textbooks.

Highly rated by third party reviewers as well.

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I have Utah accounts for our kids. My dad opened vanguard 529s and then my brother opened a NY one. Haven't drawn from them though.

Our concern is mostly over-funding a college fund with the thought that he may end up pursuing a trade over traditional 4 year degree. We are modestly funding a 529 while also realizing we may need to cash flow a chunk of it as well when the time comes (in addition to him working for some of his education as well).

We have our own souring thoughts on the evolution of college in general and the actual necessity of it, but we also acknowledge on the flip side it does still seem to be a "necessary evil" for some career paths obviously. Not evil in that it is inherently bad, but the value seems to be degrading in many ways.

With two girls, I figure the likelihood of them pursuing the trades is very unlikely. If I had boys, my thought process would probably be different.

Diggity said:

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I would imagine there's a lot more college educated folks that talk about their kids going to trade school than those who actually have kids go to trade school.

Obviously things can change over time...but I think a 529 is still a safe bet for the vast majority of posters on this board.

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Agree.

we all the know the real dream is to get your MBA so you can go out and buy that HVAC and Plumbing biz...then roll it up into an empire.

You can use 529 for trade school right? Those can be pricey as well especially for specialized licensing.

Opened the 1st kids 529 this past month with almost that exact plan. Was shooting for $100k being that any remainder can be rolled over to an IRA or used on subsequent children.

Kid is 1yr old so figure I have 17 years to get it figured out.

Anyone know the rules on the IRA conversion? ie is the conversion limited to me? or can I roll to a kid's IRA any remainder? That would be the kicker on how comfortable I feel with funding vs overfunding.

"Kid is 1yr old so figure I have 17 years to get it figured out."


Well, about that.. I had that same feeling, then in the next blink of an eye, I was helping my 2 & 3rd kids (twins!) load up to move into their dorms. Next blink of an eye, all 3 graduated, including one law school! Ugh!

When I was a much younger poster on Texags, the recommendation I rolled with is to max out your Roth IRA first as that money may be used for qualified college expenses.

So we did that first, and were pretty limited in what we did with our kids 529. We had about $19K in each one is all, and we didn't use it all since they got scholarships that covered most of what they needed.


Regarding college education: While it will continue to evolve, I think there will still be some way that employers want to distinguish the people they are hiring from the ones they don't, so I think there will be a place for the Bachelors and Masters degrees for quite a while. What I think will change is the ability to complete a typical 4-year degree in just 2 or 3 years as HS's (with colleges) are offering more ways to earn college credit with dual enrollment among other options. I think "Testing Out" of some college courses will become more popular as schools look for ways to reduce costs and incentivize degree completion.

FunnyFarm14 said:

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Opened the 1st kids 529 this past month with almost that exact plan. Was shooting for $100k being that any remainder can be rolled over to an IRA or used on subsequent children.

Kid is 1yr old so figure I have 17 years to get it figured out.

Anyone know the rules on the IRA conversion? ie is the conversion limited to me? or can I roll to a kid's IRA any remainder? That would be the kicker on how comfortable I feel with funding vs overfunding.

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It has to go the kids IRA, which also means that the kid has to have earned income to be able to contribute to an IRA. Currently limited to 7000 per year and also limited to 35,000 total amount that can be rolled over. So 7k per year over 5 years

FaceMask said:

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Have you looked into UTMA/UGMA accounts?

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. Means that account is the kid's no later than 21