Multiple 529s?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
vaught
Posts: 34
Joined: Fri Aug 11, 2017 2:00 pm

Multiple 529s?

Post by vaught » Tue Sep 05, 2017 11:48 am

We've been funding a 529 since the day our first child was born.

Now that child #2 is here we would like to do the same.

Is there any benefit to actually starting a second separate 529 or is it better to just start contributing double the amount to the 529 already in place?

Since the 529s are transferrable to siblings it seems option 2 would be ok. Curious how others have tackled this?

Jack FFR1846
Posts: 5738
Joined: Tue Dec 31, 2013 7:05 am

Re: Multiple 529s?

Post by Jack FFR1846 » Tue Sep 05, 2017 11:54 am

It doesn't matter and if you have them separate, they can be combined later on. My parents started 2 for my 2 kids. We have since had them combine them so we could use the money sooner for our first son. Beneficiary on the other son's 529 was changed, then the 2 were combined.
Bogle: Smart Beta is stupid

Rupert
Posts: 2661
Joined: Fri Aug 17, 2012 12:01 pm

Re: Multiple 529s?

Post by Rupert » Tue Sep 05, 2017 12:00 pm

Either way can work fine. I have two because I have twins who were born with amazing "fairness" sensors. That is, they very much pay attention to what the other is being given. I decided to avoid any conflict between them re college funding by opening two accounts which I fund identically.

blevine
Posts: 1692
Joined: Sat Feb 27, 2010 3:57 pm
Location: Paradise

Re: Multiple 529s?

Post by blevine » Tue Sep 05, 2017 12:19 pm

What is the age difference ?
If my kids were more then 4 years apart, definitely one account.
Once first graduates, you can simply change the beneficiary.
The only advantage to separate them in this case, is if you use target date funds and the age different is large enough
to have 2 funds with different targets, but then again, you can own both funds in same account potentially.
If you consider 2 target funds in same acct, ask your plan admin if that is possible.

Mine were 2 years apart, and have to pay 2 schools. Hence I have 2 accounts,
But could have easily left all in one account until the 2nd kid finished HS.
Already transferred from one kid to the other when money was due and one kid has a smaller balance.
Was easy to do.

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Multiple 529s?

Post by Grt2bOutdoors » Tue Sep 05, 2017 12:19 pm

vaught wrote:
Tue Sep 05, 2017 11:48 am
We've been funding a 529 since the day our first child was born.

Now that child #2 is here we would like to do the same.

Is there any benefit to actually starting a second separate 529 or is it better to just start contributing double the amount to the 529 already in place?

Since the 529s are transferrable to siblings it seems option 2 would be ok. Curious how others have tackled this?
The asset allocation for one can be much different than that of the second child. Consider this, most folks will gradually make the allocation more conservative as college looms to preserve the value of the amounts accumulated and have the monies available for spending. A younger child has the benefit of time, allowing one to invest more aggressively. A very young child could be invested at 80/20 or higher, a 17 year old child may want to be 30/70 or 50./50 or even more conservative to ensure monies are available to pay the first tuition bill. Not everyone has the luxury of holding a high equity allocation come school time, this forum is the apparent exception.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

vaught
Posts: 34
Joined: Fri Aug 11, 2017 2:00 pm

Re: Multiple 529s?

Post by vaught » Tue Sep 05, 2017 12:29 pm

The two children will only be two grades apart.

User avatar
indexfundfan
Posts: 1914
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Multiple 529s?

Post by indexfundfan » Tue Sep 05, 2017 12:40 pm

You can only make two fund exchanges in each account every year. If you have two accounts, you can make four changes. :-)
My signature has been deleted.

deskjockey
Posts: 83
Joined: Sat Dec 03, 2016 11:15 am

Re: Multiple 529s?

Post by deskjockey » Tue Sep 05, 2017 12:43 pm

Depending on your state and whether you get a tax break, it may be a good idea to open more than one, even if you only have one kid. For example, in Virginia, you can deduct up to $4,000 saved per child per account, so if you are saving a lot per child, you can open multiple accounts and increase your state tax deduction. For example, I have four accounts for each of my children, so I could, in theory, get a $32,000 deduction on my state taxes every year.

Another advantage is that you can invest in different funds that may be cost less than a single "age-based" fund, give you more flexibility, or allow you to vary the risk of each portfolio.

If you will have both kids in school at the same time, two accounts will also allow you to fund their education simultaneously.

If none of these apply, then a single account will work just as well.

Edited to correct deduction total.

marcopolo
Posts: 264
Joined: Sat Dec 03, 2016 10:22 am

Re: Multiple 529s?

Post by marcopolo » Tue Sep 05, 2017 2:18 pm

vaught wrote:
Tue Sep 05, 2017 12:29 pm
The two children will only be two grades apart.
I would highly recommend separate accounts. You can only use account for beneficiary. Since both will likely be in college with some overlapping years, you will need separate accounts at that time anyway. Once the oldest is done, you can combine if any $ leftover from the first.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Post Reply