Last year of 529 payments - what to do with funds

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matty_boston
Posts: 25
Joined: Sat Jan 09, 2021 11:21 am

Last year of 529 payments - what to do with funds

Post by matty_boston »

Hi Everyone,

Next year will be my last year of paying for my child's education.

In my 529, I have enough money to cover tuition right now (plus about 2K for room and board - off campus).

I have 13K/20K in a money market account and 6K/20K in a Lifestyle Mod Port C2 (C shares?) and 1K/20K in Lifestyle Mod Port A (A shares?).

I was thinking of putting everything into the money market to keep its value.

My questions are:

1) Does my idea make sense?
2) Is there some rule that you get penalized for using C shares before 1 year?

Thanks!
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SmileyFace
Posts: 6404
Joined: Wed Feb 19, 2014 10:11 am

Re: Last year of 529 payments - what to do with funds

Post by SmileyFace »

I don't know what these "Life Mod" funds you are talking about (maybe give more info on who holds your 529 or what state so we can decipher: Vangauard? FIdelity, Schwab, etc) but in any case - makes sense to shift all to Money Market if you are getting ready to spend the rest in a year or two. If you have a couple thousand leftover you can buy your student a nice laptop with the funds if theirs is aging.
Regarding A shares and C shares - don't know what funds these are and don't understand what 529 plan would penalize you for using your money. Is this a standard 529 or some type of prepayment plan?
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Harry Livermore
Posts: 745
Joined: Thu Apr 04, 2019 5:32 am

Re: Last year of 529 payments - what to do with funds

Post by Harry Livermore »

I moved all of kids' 529 money into the money market early in high school. My logic was, the market's "work" had already been done at that point. 10+ years of 100/0, then a few at 60/40, then a few at 40/60.
Take the risk off the table before they go off to college, and the pot of money is known.
If I were you, given the current high valuation of the market (in my opinion), I would move the other pieces into the MM like yesterday.
I don't know what C shares are (I'm assuming a class of share, but you did not list the fund company; there are some smart folks here who can probably answer that part of your question, if you provide the name of the fund company)
Cheers
intendi
Posts: 44
Joined: Sat Oct 17, 2020 10:16 am

Re: Last year of 529 payments - what to do with funds

Post by intendi »

Strong work getting the kid through college! You planned that out well by saving enough (but not too much).

Here's the last stage of the current Vanguard 529 plan (commencement portfolio):
11.60% Stocks
28.33% Bonds
60.07% Short-term reserves

Since you're in the last year, 100% short term reserves would be pretty reasonable to me.
3funder
Posts: 1578
Joined: Sun Oct 15, 2017 9:35 pm

Re: Last year of 529 payments - what to do with funds

Post by 3funder »

intendi wrote: Tue May 04, 2021 9:42 am Strong work getting the kid through college! You planned that out well by saving enough (but not too much).

Here's the last stage of the current Vanguard 529 plan (commencement portfolio):
11.60% Stocks
28.33% Bonds
60.07% Short-term reserves

Since you're in the last year, 100% short term reserves would be pretty reasonable to me.
+1
Global stocks, US bonds, and time.
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