Cash Accounts vs 529

[safeahnys73]

Hi,

New to forum.

Just wondering what to do with some excess funds.

Right now, my wife and I are maxing our 401ks, IRAs, and putting the max state tax deductible amount in my 2 children's 529s.

Me: self employed llc (401k 19.5k + 38.5k =58k, 6k trad ira (non-deduct)
Wife: employee (401k 19.5k, 6k trad ira (non-deduct)
529: 4k x2 kids

Anyways, my daughter is 15 and son is 13. We know we won't qualify for financial aid (hh income around 500k).

We both are in second careers starting relatively late (mid and late 30s). We have about 1mil+ in all assets. We are in our mid/late 40s.

My worry is obviously having enough to have comfortable retirement. I'll have a small govt pension (2.5k and health insurance at 60) to go along with social security at 62 (2.5k + 1.5k).

My questions is should I put savings in traditional brokerage account and pay for tuition or should I put as much as I can in 529 for tax advantages. I realize if they scholarships then my money will be stuck in 529s and probably passed onto grandkids. I'd rather have it for a more comfortable retirement.

My wife and I think that my daughter and son will probably attend a private colleges (75k/year).

I am genuinely confused on the right thing to do.

[johnny]

In NY there is a deduction on state income tax of up to $10k for 529 contributions. That's worth about $500-600. I contribute the $10k and leave the rest accessible.

If you have a long horizon and are seeking tax free growth, that may change your approach.

[Grt2bOutdoors]

Outside of merit/athletic scholarship with your income and assets you aren’t going to get financial aid. You have 7 years for daughter to fund 300k plus some level of tuition inflation (let’s call it 5% over 4 years - optimistic). Son is 13, you have 9 years to sock away 300k plus inflation of say 7% over the 4 years. That’s 630k less scholarships (say 25 percent in cumulative scholarships) ~ $475k, how much have you saved for this expense?