Adding significant contribution to grandson's Utah 529

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loves2read
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Adding significant contribution to grandson's Utah 529

Post by loves2read » Tue Oct 16, 2018 3:47 pm

My husband and I saw our FA yesterday and let a check for a 75K contribution to our grandson's Utah 529 account, waiting for that to post.
Grandson in 6--and in kindergarten. His birthday is July 31 and our daughter who teaches elementary school decided early on to hold him back a year for variety of reasons but nothing related to IQ. He is bright, reading well above grade level, My worry is he will be bored at his public school. There is a public G/T school that starts w/grade 2 so that might be an option.

We made initial contribution of 14K in November of 14 I think. Our SIL has had couple of lengthy job interruptions since 2014 and we chose to give them tax-free gift money directly vs make contribution to 529. SIL's work situation is still struggling, but daughter had investment through family LLC that paid off this year so we decided to add to the 529.

The account currently has this allocation--not what we chose but the FA we use and maybe the 529 itself for a "moderate growth" portfolio--because of his age...
My husband is the Account Owner for our grandson and our daughter is the Successor
I could have sworn there were DFA funds in with the Vanguard but can't find any history of the portfolio changing on the website
Would have to look at info from last time we saw FA or ask directly--perhaps DFA is no longer an option for this Utah plan.
We have them through our FA in our other accounts. Doing on an iPad--not sure about the "table aspect".

FUND. Percent. Shares. Value
Vanguard Total Bond. 11.27% 381.65. $ 3,927.00
Vanguard Total Stock. 51.75% 296.35. $ 18,039.00
Vanguard Short-Term. 3.62% 121.19. $ 1,262.00
Investment Grade
Vanguard Emerg Mkt. 6.83%. 29.53. $ 2,381.00
Vanguard Devlpd Mkt. 20.83%. 356.56. $ 7,260.00
Vanguard Total
International Bond. 2.57%. 27.55. $ 896.18
PIMCO Interest Income. 3.12%. 108.26. $ 1,088.17

My husband and I have double digit 7 figures in assets in various accounts and two homes--no debt.
It is possible that we would be able to pay directly or offer grandson encentives to help pay college costs, but this was way to take some money out of our estate now and have it grow.
Any suggestions as to allocation balance or perhaps something else like fund with small cap or value tilt given the time frame?

Appreciate suggestions.

DarkHelmetII
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Re: Adding significant contribution to grandson's Utah 529

Post by DarkHelmetII » Tue Oct 16, 2018 3:53 pm

Personally, I'd keep it simple. X% total stock index. Y% total bond index.

See https://investor.vanguard.com/529-plan/ ... ed-options. Vanguard recommends the mix by age and how aggressive you want to be.

At age 6:
Conservative: 40% stock / 60% bonds
Moderate: 70 / 30
Aggressive: 90 / 10

Perhaps even simpler to do target date. But I'd argue doing a two fund lazy portfolio is much simpler than what FA is recommending.

delamer
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Re: Adding significant contribution to grandson's Utah 529

Post by delamer » Tue Oct 16, 2018 3:59 pm

Given your grandson’s age and all the other assets you have available, I’d get rid of the bond funds and put that money into the Total Stock fund.

If you do want to keep some bonds, stick with the Vanguard Total Bond. But 4 is excessive.

You already have smaller caps in the Total Stock fund. I wouldn’t bother with any tilting.

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Re: Adding significant contribution to grandson's Utah 529

Post by LadyGeek » Tue Oct 16, 2018 4:02 pm

loves2read - You had a duplicate post, which I've removed. I moved delamer's reply into the on-going discussion.
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WhiteMaxima
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Re: Adding significant contribution to grandson's Utah 529

Post by WhiteMaxima » Tue Oct 16, 2018 4:05 pm

You can gift $70000 per grand parent (5 year) to a 529 plan. Utah (vanguard) has static fund plan or aged based. I like the static one because of low fee and better control of AA. You have 10 years to let it grow. Not very long horizon. 60/40 (40US/20intl/40bond) or 70/30 (40US/30Intl/30bond) balanced index would do.

RickBoglehead
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Re: Adding significant contribution to grandson's Utah 529

Post by RickBoglehead » Tue Oct 16, 2018 7:48 pm

WhiteMaxima wrote:
Tue Oct 16, 2018 4:05 pm
You can gift $70000 per grand parent (5 year) to a 529 plan. Utah (vanguard) has static fund plan or aged based. I like the static one because of low fee and better control of AA. You have 10 years to let it grow. Not very long horizon. 60/40 (40US/20intl/40bond) or 70/30 (40US/30Intl/30bond) balanced index would do.
$75,000

inbox788
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Re: Adding significant contribution to grandson's Utah 529

Post by inbox788 » Wed Oct 17, 2018 3:04 am

RickBoglehead wrote:
Tue Oct 16, 2018 7:48 pm
WhiteMaxima wrote:
Tue Oct 16, 2018 4:05 pm
You can gift $70000 per grand parent (5 year) to a 529 plan. Utah (vanguard) has static fund plan or aged based. I like the static one because of low fee and better control of AA. You have 10 years to let it grow. Not very long horizon. 60/40 (40US/20intl/40bond) or 70/30 (40US/30Intl/30bond) balanced index would do.
$75,000
If the donation is from one grandparent, it leaves the possibility of another 5 year donation or annual donations by the other during this initial 5 year period. Is there something in the tax filing that helps this separation? I looked into adding to the 5 year donation after making a less than maximum donation, but it was so complicated and confusing I gave up.

With the timeframe involved, I'd take my chances and go 100% total market or total US market and during the high school years do a quick glidepath adding bonds to maybe around 50%. Or you could be more conservative as WhiteMaxima suggested, but keep it simple with 2 or 3 broad low cost index funds.

It's a bit of market timing, but given the number of years involved and the so called peak some folks think we're in, I would have done $30k max a year for a few years instead, both for cost averaging as well as simpler accounting.

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loves2read
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Re: Adding significant contribution to grandson's Utah 529

Post by loves2read » Fri Oct 19, 2018 12:01 am

There is a tax form that has to be filled out to show that you are paying a multiple of the one year tax free gift--
For us it is really 75/2 for 5 yrs...so we each gave 7500 x 5...which frees us to either add more into the 529 or give tax-free directly to grandson. It really only matters if one of us dies in next five years I guess. Right now SIL just has no job and since he refuses to consider relocating to better geographical area, we didn't want to commit the maximum contribution.

Maybe not the best time to make a large bolus---the requirements of the 529 accounts allow for only 2 rebalancing. If we had known/been reminded of that we might have been contributing smaller amounts more often...they were advocating for a 75 or 150 which I was uncomfortable making because the market is going to meet headwinds with the rising debt here and around the world as well as other factors.

I am not as sanguine as most of you about the upside of growth stocks in next 3-4 years. I was thinking we should consider some type of income/dividend fund to feed more income into the 529---maybe even a small position in gold or precious metals as hedge against high volatility and deep recession.

Anyone think holding half the money in the income fund until after the first of the year is prudent?
Or too much like timing the market?

Once again--I appreciate your comments and your patience with my questions.

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loves2read
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Re: Adding significant contribution to grandson's Utah 529

Post by loves2read » Wed Oct 24, 2018 2:31 pm

Since the various indexes seem to be offering a sale, we are still hanging fire on putting the money to work.

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