529 Plans - 1 Plan for all kids vs. multiple plans

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ChiliH20
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529 Plans - 1 Plan for all kids vs. multiple plans

Post by ChiliH20 » Tue Aug 30, 2016 9:40 am

My wife and I just had our second child. Our oldest is 2.5, and we are not planning on having a third unless an accident happens. I have a 529 plan setup for our oldest that we contribute to monthly. I've been trying to do some research on the benefits of having a plan for each child versus increasing contributions in one account for both children. One of the main issues I didn't think about until looking into this is having the kids overlap while in school. I was leaning towards one account for both kids for simplicity, but now I think it might be beneficial to have separate accounts. I came across this thread on this topic viewtopic.php?t=106487 but haven't seen a whole lot else discussed. Does anyone have any additional insight since this thread is from 2012? What are the best resources for researching 529 plans?

Tigermoose
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by Tigermoose » Tue Aug 30, 2016 9:45 am

The 529 Plan we use has age-based allocations. So each child has his or her own account, and it modifies its allocation as the child gets closer to age 18. This is a useful way to automatically manage risk. We tend to put most of the new money in the youngest child's account, in order to get a longer runway for gains.

The money can easily be transferred between each child's account, so I do not see any reason not to have multiple accounts so you can better account for risk.
Institutions matter

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beyou
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by beyou » Tue Aug 30, 2016 11:50 am

I just opened a 2nd account in my younger child's name since he's starting college.
Was easy to transfer assets from my oldest as beneficiary, to my youngest as beneficiary,
with me as the owner either way. No reason to have had multiple accts all these years
when they were growing up, since they were close together in age. Would have had
same investments in both anyway. If they were far apart in age, and you would use the age based
portfolios, only reason I would consider an acct for each beneficiary.

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DaftInvestor
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by DaftInvestor » Tue Aug 30, 2016 11:56 am

I have had one account per child - The reason I went with multiple is because I've had them invested a bit differently (more conservative when they are close to entering college). Even with only 2 years apart - you might want slightly different stock/bond allocations. Its easy to move the funds between accounts when the time comes to pay the bills.

ChiliH20
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by ChiliH20 » Tue Aug 30, 2016 12:19 pm

Thanks for all the input!

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CAsage
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by CAsage » Tue Aug 30, 2016 3:03 pm

Something else you might want to consider is how much financial aid you are likely to qualify for, and the impact of 529s funds for that. For example, if all the money is in the 2nd child's name. the first child might qualify for more aid. You could transfer it over his last year... I have heard people not take out 529s money until the student's senior (or junior year) to optimize the income/aid formulas. This kind of depends on how much aid your family might qualify for (if any), or whether the 529s would be fully funded for each child to pay it all (then separate and load it up!).
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Tigermoose
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by Tigermoose » Tue Aug 30, 2016 3:06 pm

CAsage wrote:Something else you might want to consider is how much financial aid you are likely to qualify for, and the impact of 529s funds for that. For example, if all the money is in the 2nd child's name. the first child might qualify for more aid. You could transfer it over his last year... I have heard people not take out 529s money until the student's senior (or junior year) to optimize the income/aid formulas. This kind of depends on how much aid your family might qualify for (if any), or whether the 529s would be fully funded for each child to pay it all (then separate and load it up!).
This is not the case for FAFSA, but I suppose it might be the case for certain private colleges that have their own method for assessing financial aid. The FAFSA just totals up all assets, and does not distinguish between child beneficiary accounts.
Institutions matter

niceguy7376
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by niceguy7376 » Tue Aug 30, 2016 3:24 pm

Another case to consider: Do you get any state tax benefits for contributing to 529 plans? If so, is it at beneficiary level or family level?
In state of GA, we get state tax benefit on upto 2k per each child. So we have separate plan for each kid and get tax free on upto 4K .

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CAsage
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Re: 529 Plans - 1 Plan for all kids vs. multiple plans

Post by CAsage » Tue Aug 30, 2016 3:42 pm

Having the 529s in Grandparent's name for benefit of child, and then spending it all the last year or two, would benefit financial aid. Grandparent assets are not counted in FAFSA. Just things to think about! If you are going to pay for it all, then by all means fill up both accounts for both children....

http://www.savingforcollege.com/article ... ancial-aid
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

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