Optimal way to fund a 529 account a with taxable account

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nptit
Posts: 57
Joined: Sun Mar 29, 2015 5:51 pm

Optimal way to fund a 529 account a with taxable account

Post by nptit »

Hi,

Just had a newborn and thinking about the optimal way to fund a 529 account when we also have a sizable taxable account.
The taxable account is a standard 3 fund portfolio at Vanguard say ~300K.
My thinking is to take advantage of the tax treatment one can sell from the taxable account in market decline and then use that proceed to lump sum that into the 529 at a lower cost basis. This would help lower the tax burden in the taxable account while at the same time utilizing more of the tax advantageness of the 529, since it would be buying in a lower price. It seems somewhat similar to tax loss harvesting, but moving to a different account with better tax treatment.
What are your thoughts on that strategy or should we simply just do an X dollars per month standard approach?

Thanks for your input!
runner540
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Joined: Sun Feb 26, 2017 5:43 pm

Re: Optimal way to fund a 529 account a with taxable account

Post by runner540 »

How long are you willing to wait for the market decline? Have you looked at superfunding with $75 or $150k?
Afty
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Re: Optimal way to fund a 529 account a with taxable account

Post by Afty »

Instead of selling from the taxable account, what if you redirected future contributions to the 529?
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1789
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Re: Optimal way to fund a 529 account a with taxable account

Post by 1789 »

OP,
You are wasting your time with all those hypothetical scenarios. If you want to save in a 529, you can just start tomorrow.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
Topic Author
nptit
Posts: 57
Joined: Sun Mar 29, 2015 5:51 pm

Re: Optimal way to fund a 529 account a with taxable account

Post by nptit »

Thanks for the responses you all. Yes, it seems a bit overkill. I'll likely redirect future contributions to the 529 on a monthly basis like a typical account.
Grt2bOutdoors
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Re: Optimal way to fund a 529 account a with taxable account

Post by Grt2bOutdoors »

Open account with the minimum requirement, then deposit a set amount based on your budget into the account. When the account has reached an amount you deem acceptable you can either stop contributions. You don’t want to overfund the account.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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