How much are you putting in a 529?

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ThinkingItThrough
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Re: How much are you putting in a 529?

Post by ThinkingItThrough » Sat Jan 06, 2018 6:42 pm

We have three kids, ages 6, 3, and less than 1. Before the addition of our newest child, we were striving to put in around $10k per year per child, so $20k per year for the oldest two kids. With the addition of the newest one, we continue to strive to put in about $10k per year per kid, so it will be about $30k annually.

We hope to fund as much college education as possible for them when they complete their secondary education, even if that may include private colleges outside of our residing state.

529 contributions are made after maxing out as much of the tax-advantaged accounts as possible. We live in a state that provides state tax deductibility of 529 contributions up to a max of $10k per year in total across all 529 contributions.

Oldest kid: ~$45k
Middle kid: ~$32k
Youngest kid: ~$6k

In the case that the 529s are overfunded by the time they reach college/post-graduate studies, we intend to pass on any remaining balance to grandchildren...

Beachdrinks
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Re: How much are you putting in a 529?

Post by Beachdrinks » Sat Jan 06, 2018 6:47 pm

dmagic wrote:
Sat Jan 06, 2018 3:37 pm
If one lives in NJ and works in Manhattan, would I still qualify for the NY 529 tax deduction since I still pay NY state taxes?
I just went deep on this with my CPA. Basically the deduction ends up being useless living in NJ working NYC. I wish NJ would update and enhance their 529 tax benefits and planning.

james865
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Re: How much are you putting in a 529?

Post by james865 » Sat Jan 06, 2018 7:16 pm

Recently started 14k for each child per year. I'll plan to stop contributing when there's enough to pay 100% for a 4-year public university.

Some give me a hard time for wanting to fund 100% of my kids college. I hope to teach them hard work and financial responsibility before they go to college. If I'm fortunate enough to have the means to help my kids, I will; although, I don't blame anybody that has a different philosophy.

Yankuba
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Re: How much are you putting in a 529?

Post by Yankuba » Sat Jan 06, 2018 7:25 pm

NYS resident, two kids.

I contribute $5k per kid per year. NYS lets me write off the $10k but no more than that.

50% of the money goes to the conservative age based option

50% of the money goes to the moderate age based option

With only a 20 year timeline I didn’t want to be too stock heavy

18_bank_accounts
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Re: How much are you putting in a 529?

Post by 18_bank_accounts » Sat Jan 06, 2018 7:28 pm

3 year old twins. We are putting in $13k a year times two 529 plans. Currently at $55k each.

Plan is to get to $500k each by the time they enter college.

mmcmonster
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Re: How much are you putting in a 529?

Post by mmcmonster » Sat Jan 06, 2018 7:56 pm

Two kids, 11 and 14. Pennsylvania residents. We get 14k off per child per adult in state tax breaks.

We've settled on putting 14k in per kid in their PA state 529 plans. We missed a year or two early on when things were tight but I'm not that incentivized to make it up (it's possible since technically my wife and I can each put 14k into each child's account).

Since their 529 plans were set up initially with different risk profiles, they currently each have ~$230k. I figure anything left over will be rolled over to each child's first child (first grandchild on each side). :beer

lunean
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Re: How much are you putting in a 529?

Post by lunean » Sat Jan 06, 2018 8:02 pm

We have 3 kids, 13, 11, and 9. We have a goal of $2500/year/kid. We can deduct up to $10,000 total, so we are short on that. The accounts were opened in 2015. We just couldn't swing it before that. The total balance is about $23,000.

We hope to be up to $10,000 per year by the time the oldest is a senior. We figure if we are used to saving $10,000/year we have that much to spend on cash flowing his college costs.

lolbatross
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Re: How much are you putting in a 529?

Post by lolbatross » Sat Jan 06, 2018 8:07 pm

We did 20k ( IL state max deduction) for the first 2 years of each kids life. So 40k each and then let it ride. Kids are almost 2 and almost 4. Balances are 50k &55k. That’s about 3 of 8 years worth of U of I. With some growth we should cover a good portion with the 529. Our strategy was always to get some tax free gains while cash flowing or taking out loans on the rest.

At this point we are done with planned contributions. We of course will revisit periodically especially with IL state tax constantly rising.

Depending on our kids we made decide to have them take out loans for most or we may write a check for it. Our taxable or Roth’s can be tapped if needed as well.

HopeToGolf
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Re: How much are you putting in a 529?

Post by HopeToGolf » Sat Jan 06, 2018 8:12 pm

No tax deduction in my state. Our goal was to fund retirement first then tackle the 529. Our goal with the 529 was to ensure that it covered 4 years at our flagship public university. Beginning the year we started funding that meant we needed to contribute ~$600/month and get average market returns. If the offspring goes private we will have to cash flow the difference or use savings.

UpstaterMom
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Re: How much are you putting in a 529?

Post by UpstaterMom » Sat Jan 06, 2018 8:52 pm

One 11 year old, and we put in $4k/year.

One set of Grandparents makes gifts to the 529. I wish the other set would, but hints have fallen on deaf ears. I know I should change my strategy from "strong hints" to "direct requests", but I don't think that would help anyway.

EnjoyIt
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Re: How much are you putting in a 529?

Post by EnjoyIt » Sat Jan 06, 2018 9:19 pm

18_bank_accounts wrote:
Sat Jan 06, 2018 7:28 pm
3 year old twins. We are putting in $13k a year times two 529 plans. Currently at $55k each.

Plan is to get to $500k each by the time they enter college.
This seams like so much. Why? Are you expecting private undergrad and grad school?

Don't get me wrong I think it is amazing you can do that I just don't understand the point of risking so much money on a potential withdrawal penalty if it is unused.

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Smorgasbord
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Re: How much are you putting in a 529?

Post by Smorgasbord » Sat Jan 06, 2018 9:30 pm

By my count, I'm the third Hoosier posting to this thread that they contribute exactly $5,000 to max the state income tax deduction. A 20% credit is great, and I only hope it sticks around following the changes in the federal tax laws.

18_bank_accounts
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Re: How much are you putting in a 529?

Post by 18_bank_accounts » Sat Jan 06, 2018 9:50 pm

EnjoyIt wrote:
Sat Jan 06, 2018 9:19 pm
18_bank_accounts wrote:
Sat Jan 06, 2018 7:28 pm
3 year old twins. We are putting in $13k a year times two 529 plans. Currently at $55k each.

Plan is to get to $500k each by the time they enter college.
This seams like so much. Why? Are you expecting private undergrad and grad school?

Don't get me wrong I think it is amazing you can do that I just don't understand the point of risking so much money on a potential withdrawal penalty if it is unused.
Yes, I’m planning for worst case scenario private school. I supposed we could stop saving if we get to a number and decide that’s enough. But I would rather save too much than too little.

Before they were born I estimated $500k as worst case for private. Both parents went to an expensive private school - that’s where we met!

I would be happy to also apply it to grad school if needed. Alternatively I would be just pay the 10% penalty. Or, if we really overshoot our retirement as well, apply it to grandkids.

Finally, we are planning on having a third kid. I’m actually not going to increase college savings if that happens. I figure there will likely be money left over from one or the other 529.

poundwise
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Re: How much are you putting in a 529?

Post by poundwise » Sat Jan 06, 2018 9:59 pm

I "superfunded" the 529 for each of our two very young children, dropping 5 times the annual gift contribution into Vanguard's aggressive growth portfolio at their births. Each stands at around 100K now. My logic was similar to that of 18_bank_accounts, I think. The way I see it:

- we had the funds available in taxable (sitting as dry powder)
- we were maxed out on all other tax-deferred options
- there is little likelihood we will need the cash ourselves (we live below our means; hopefully we always will)
- our kids may go to private universities, who knows
- our kids may go to graduate school
- we may want additional degrees ourselves in retirement. for me, that would be a fun retirement.
- if we have extra, I'll give it to grand kids or nieces/nephews, keeping an eye on gen-skipping rules. can't think of a better way to donate money.

I could hardly believe the tax code change that allowed funds to be spent on private k-12 school, but that opened up yet another option. I realize we are very lucky to be in this position. Incidentally, I took no professional advice before making this move, so if anyone sees blunders here, I'd be grateful for the feedback!

Rayandron
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Re: How much are you putting in a 529?

Post by Rayandron » Sat Jan 06, 2018 11:53 pm

We are putting $8k/year for our infant with the goal of funding 4 years of flagship public school and some leftover for grad school or grandchildren. As the infant gets older and college costs grow (or stabilize!? We can hope right?) , we will adjust our contributions accordingly.

HappyGuy
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Re: How much are you putting in a 529?

Post by HappyGuy » Sun Jan 07, 2018 2:05 am

Planed to put $14000 (up to whatever the gift tax limit is) for each child each year. Will use it to pay for their K-12 private school.
If there is anything left or I changed my mind, will just take the 10% penalty or leave it to grandchildren.

jackholloway
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Re: How much are you putting in a 529?

Post by jackholloway » Sun Jan 07, 2018 3:12 am

My strategy was fairly simple - my parents funded a rather expensive private school, so I wanted to have the same capability for my child if life treated me well. If it treated me well enough, I wanted to insure she could get through a state school without debt. I also wanted to make sure I had covered retirement well enough, given a few high earning years.

For a left coaster, you would want to look at Berkeley, which runs 138k, and a place like Stanford, Caltech, or Harvey Mudd for your upper bound - 278k today. Since 529s are a good, but not perfect vehicle, not all of that large pile of money would go into a 529 - you would want to have some that you could cash out if it makes sense, but that you could also preserve without substantial penalties for other uses.

In my case, I had an earnings spike when my daughter was under 10, so we did a five year lump sum funding of a 529. That portion of the plan would cover a state school, and has been in the Colorado stable value fund. While that was fairly conservative, it also was the only stable value fund I had access to, so it did double duty. It would have been better to invest more aggressively over a longer time horizon, but that was when I had a windfall. You play the cards you are dealt, especially when they are good cards.

I would be surprised if she did not go to college at all, and if she gets scholarships, I can recover the 529 money without penalties, and ordinary income taxes on earnings.

She inherited some college funding from various relatives, which covers perhaps half of the remaining amount - a great windfall. That is invested a bit more aggressively, and also in 529 or UGMA accounts, as that was the wish of the person leaving the money. Either way, that money is destined to be hers, not mine.

To cover that final quarter of the cost of a top end schools, we would need another 60k today, perhaps another 90-100k in today's dollars in a decade.

In an ideal world, we could cover that with cash flow. In a less ideal world, there are ibonds, taxable accounts, or basis in backdoor roth iras, and in an even less ideal world, we would not even be considering that much money for education. The right choice would depend on the markets, how inflation is going, the current tax regime, and taxable cost basis.

A440
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Re: How much are you putting in a 529?

Post by A440 » Sun Jan 07, 2018 7:07 am

We started an 529 for each of our 2 children after they were born. After making sure we funded our Roths and 403(b)(7) first, we would contribute enough each month to pay for what an estimated 4 years of a a public state college would cost when they turned 18. We used Vanguard's college planner to help with this endeavor. Currently, the average amount is about $30,000/yr.

Fast-forward to today:
15 year old's balance= $122,000 (currently contributing $100/month)
11 year old's balance= $80,000 (currently contributing $350/month)

Any overage can be applied to graduate school, or saved for the next child (or grandchild someday). If they are underfunded, we can use taxable accounts to pay the difference, or the student can help out as well. Having some "skin in the game" is fine by us.

PlayingLife
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Re: How much are you putting in a 529?

Post by PlayingLife » Sun Jan 07, 2018 7:36 am

dmagic wrote:
Sat Jan 06, 2018 3:37 pm
If one lives in NJ and works in Manhattan, would I still qualify for the NY 529 tax deduction since I still pay NY state taxes?
A lot of interesting responses above! While BH's are typically aligned with things such as "max 401k", 529's are different in that personal situations and state credits are variable. Interesting.

This was my questions when we enrolled in my son's 529 as I live in NJ. My understanding is that you unfortunately must live in NY. We were torn between enrolling in Utah or NY - while there is likely not a chance we will ever live in NY, we chose NY anyway due to their overall 529 guidelines and the very slim chance that it could happen someday. In that case, we would prefer not to transfer into NY and instead already be enrolled.

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jfn111
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Re: How much are you putting in a 529?

Post by jfn111 » Sun Jan 07, 2018 8:22 am

The wife and I started 529 plans for our 2 grandchildren. Nothing earth shattering, $1000 to start and $100 dollars per month, per kiddo. MN has now instituted a $3000 state deduction so we will make an extra payment to get to $1500 per kid each year.
We opened them up when each of the GK's were born, now 3 & 1, so they will have 18 years to grow.
It certainly won't be enough to cover 4 years of college but we figure every little bit helps.

orthodoc
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Re: How much are you putting in a 529?

Post by orthodoc » Sun Jan 07, 2018 8:43 am

I have 3 children (2nd, 6th and 7th grades) and they all attend private elementary schools. I have been saving in a 529 for college and have around $450k. I consider them funded for state school and was about to stop saving. Now that they have added the ability to use them for private schooling I am reconsidering. I have a state that currently allows a deduction for the first $16k.

I am considering moving the assets to Colorado Stable Value Fund earning 2.29% and contributing our max state deduction of $16k. Cash flowing tuition through the year then withdrawing the years expenses. I consider this my "won the game" strategy, our gains are around 200k of the 450k. The additional funding is for the deduction and the tax free interest of 2.29%. I have been thinking about this since last fall and was waiting to see the new interest rate which unfortunately fell from 2.59%. In the mean time the assets have grown by close to 10%, thank goodness for analysis, paralysis :D If I keep "considering it" the account will be way overfunded :moneybag

MikeG62
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Re: How much are you putting in a 529?

Post by MikeG62 » Sun Jan 07, 2018 9:07 am

OP, our initial plan was to fund enough in the 529 to cover the full cost of a public university for both of my daughters. However, once attaining that level, we continued funding each of their 529’s up to roughly the cost of a 4 year private university. Funding was done over many years (>decade) though both bi-weekly contributions from my paycheck as well as periodic lump sum amounts from stock option exercise proceeds.

Oldest daughter went to a private university and we used just about every dollar in her 529 account (I think we were left with around $1,500 extra in her account). My younger daughter is scheduled to graduate from a public university this May and we will have lots of excess funds in her account.

Plan is to leave these funds in the 529 accounts (split even between my two daughters) and invest aggressively for growth as 529 accounts for their as yet unborn children. This will represent a massive head start on college savings several decades in the future. If for some reason neither of them have kids, we can repurpose for future grand-nieces/nephews. As far as we are concerned, this feels like found money.

By the way, we are at a point now where nearly 50% of the amounts withdrawn from my younger daughters 529 represents earnings. So I’d say the tax savings of using the 529 account were not insignificant. Also, would point out that my annual earnings were such that we never qualified for the AOTC prior to 2017. For those who do, you should build that into your 529 strategy.

3dream3
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Re: How much are you putting in a 529?

Post by 3dream3 » Sun Jan 07, 2018 10:18 am

We started putting in 20k (up to IL max deduction) within the last couple of years. We have 3 kids and prior to putting the max, we always just put whatever we could afford at the time (which wasn't really much) outside of the money that they received as gifts. Our kids are 10 and under and the balances are about 25k, 24k, and 18k.

RandomFly
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Re: How much are you putting in a 529?

Post by RandomFly » Sun Jan 07, 2018 10:47 am

3 kids: 15, 11, 9. I have ~ 500k in the 529 plan spread across all 3. I think I am reaching the point where the risk of over funding starts to negate the expected return from tax benefits. I plan to let the accounts grow and fund any balance required from cash flow -- may still put in 10k / year to get the NY state tax benefit. We started a bit late, but put in 28k / kid / year over last 5 years or so.

Passiveinvestor6
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Re: How much are you putting in a 529?

Post by Passiveinvestor6 » Sun Jan 07, 2018 12:10 pm

2 kids, ages 10, 4
529 k- 10 year old- 87k (moderate age based), 4 year old- 61k (aggressive age based).
Older kid-Just opened another 529 k who goes to private school- new 529 k moderate age based, opened with 20k and plan is 3k/month for next 4 years.Will not contribute to old 529 k anymore and will use 10k/year for private school- 9 years of school left.
Younger kid- will continue 3k/month and then stop in 1.5 years, and then change that plan to moderate age based and stop contributing to this plan and open a new moderate age plan for college education. Use the current (old) 529 k for 12 years of private school.

MarkBarb
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Re: How much are you putting in a 529?

Post by MarkBarb » Sun Jan 07, 2018 12:23 pm

We targeted our college savings at 125% of the annual cost of the most expensive state school for each child. That worked out to roughly $500/month for most of their childhood. We used a 529 for the first 75% under the theory that a dollar put into a 529 for a 1 year old has many years of tax benefits and a high likelihood of being used for college. An additional dollar saved for a 17 year old has much less time for tax benefits and a greater risk of not being used for college. We stayed with 529s until they were about 11 and then starting putting the rest into taxable savings.

CT-Scott
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Re: How much are you putting in a 529?

Post by CT-Scott » Sun Jan 07, 2018 12:52 pm

Here's my story...

For much of my 20's-30's, we were living beyond our means and not saving enough for retirement. I always contributed up to my company's 401k match, and sometimes a bit more. But it wasn't until the last several years we've been able to max out our 401k contributions, including the 50+ catch-up for my wife. Over the last few years we've also been maxing out a Roth IRA contribution (requiring backdoor Roth conversion), and also maxing out my HSA.

In the meantime, our only child was growing older and saving in advance for college just wasn't feasible. We was also had no idea what path my daughter might choose and I was worried about funding a 529 plan, only to find that she ended up not going to college at all, and not being able to withdraw the money. But as she was finishing up her Senior year in high school, I did some more research and discovered that my fears about the 529 plan money being unaccessible were unfounded. What some may not realize is that you can always withdraw your contributions (principal) for non-education expenses, without penalty. And if you want to even withdraw any earnings you may have made, the penalty on that amount is just 10%. Around that time, I also discovered that I could deduct up to $10K on my state income taxes (CT). Doh! I wish I had done my homework on 529's sooner.

So our daughter started college, and I just started to fund the 529 plan, where I'm basically just "filtering" $10K/year through it to save on our state income taxes and earn a little bit of interest on it. I put $10K in at the beginning of the year, and withdraw about $10K at the end of the year. I have it in a fixed fund which currently earns a guaranteed 1.8% interest.

Incendiary
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Re: How much are you putting in a 529?

Post by Incendiary » Sun Jan 07, 2018 12:55 pm

I expect to fully cover the cost of private college and graduate school for my kids. My and my spouse's parents did that for us, so it's only fair. We have about $387k in 529s for them. They are almost 6 and 3.5 yo. We contribute about $30k to their funds each year.

ChrisC
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Re: How much are you putting in a 529?

Post by ChrisC » Sun Jan 07, 2018 1:29 pm

Incendiary wrote:
Sun Jan 07, 2018 12:55 pm
I expect to fully cover the cost of private college and graduate school for my kids. My and my spouse's parents did that for us, so it's only fair. We have about $387k in 529s for them. They are almost 6 and 3.5 yo. We contribute about $30k to their funds each year.
Why is intergenerational fairness an issue? I see this often as a reason for providing support, though from my perspective it equally affects those whose parents could not provide for them -- sort of like balancing what their parents could not do for them by providing, in many cases too much, support for their children. Not to stray too far from the topic, but I see the funding of postsecondary education more of a parenting and student preference issue than a financial one. If you believe financing the cost of a private college and graduate/professional schools is a basic necessity that parents are obliged to implement -- like food, shelter, clothing, healthcare, or physical and mental/emotional nurturing -- then I see your point.

My wife and I will probably be in a position in 15 years hence to finance expensive college educations for our grandchildren -- but this does not seem to be a good idea from our perpective and our adult children agree, at this time. Besides, my immediate family tends toward public educational institutions, any way, though among us we have graduated from Ivy League schools and expensive professional schools (private and public).

remomnyc
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Re: How much are you putting in a 529?

Post by remomnyc » Sun Jan 07, 2018 1:33 pm

Goal set 12 yrs ago was $250k per child to pay most of the cost of 4-yr private. Started with $10k/yr/kid contributions and then reduced to $500/mo/kid then to $10k/yr (to match state tax deduction) as balances grew.

Child 1: Age 14, contributions $100k, stopped contributing 2 yrs ago, balance $210k, 50/50
Child 2: Age 12, contributions $104k, reduced contributions from $10k yr to $500/mo this yr, balance $188k, 62.5/37.5

Any excess college costs will be funded out of pocket. Any leftover funds will be turned over to the kids five years after they are self-supporting.

Incendiary
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Re: How much are you putting in a 529?

Post by Incendiary » Sun Jan 07, 2018 1:47 pm

ChrisC wrote:
Sun Jan 07, 2018 1:29 pm
Incendiary wrote:
Sun Jan 07, 2018 12:55 pm
I expect to fully cover the cost of private college and graduate school for my kids. My and my spouse's parents did that for us, so it's only fair. We have about $387k in 529s for them. They are almost 6 and 3.5 yo. We contribute about $30k to their funds each year.
Why is intergenerational fairness an issue? I see this often as a reason for providing support, though from my perspective it equally affects those whose parents could not provide for them -- sort of like balancing what their parents could not do for them by providing, in many cases too much, support for their children. Not to stray too far from the topic, but I see the funding of postsecondary education more of a parenting and student preference issue than a financial one. If you believe financing the cost of a private college and graduate/professional schools is a basic necessity that parents are obliged to implement -- like food, shelter, clothing, healthcare, or physical and mental/emotional nurturing -- then I see your point.

My wife and I will probably be in a position in 15 years hence to finance expensive college educations for our grandchildren -- but this does not seem to be a good idea from our perpective and our adult children agree, at this time. Besides, my immediate family tends toward public educational institutions, any way, though among us we have graduated from Ivy League schools and expensive professional schools (private and public).
It's not really so much intergenerational fairness in my instance. I guess in a way it is, but really it's more that I would feel bad and like a freeloader for getting this advantage and not providing the same for my kids.

For the same reason, I will pay for their weddings, buy their first cars, help them with down payments for their houses, etc.

WhiteMaxima
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Re: How much are you putting in a 529?

Post by WhiteMaxima » Sun Jan 07, 2018 1:51 pm

As an estate planning, I will put as much as possible. leave it to generation to come as education fund tax free.

Bacchus01
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Re: How much are you putting in a 529?

Post by Bacchus01 » Sun Jan 07, 2018 2:25 pm

WhiteMaxima wrote:
Sun Jan 07, 2018 1:51 pm
As an estate planning, I will put as much as possible. leave it to generation to come as education fund tax free.
This is what we do. We are funding them for each of our kids and ourselves. Taking the tax deduction at state level.

We anticipate doing that the rest of our lives with the goal of providing our eventual hopeful grandchildren with a free quality education.

staythecourse
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Re: How much are you putting in a 529?

Post by staythecourse » Sun Jan 07, 2018 2:45 pm

WhiteMaxima wrote:
Sun Jan 07, 2018 1:51 pm
As an estate planning, I will put as much as possible. leave it to generation to come as education fund tax free.
As I have said numerous times on this forum the 529 plan really is not designed politically for the middle class, but for the rich prior to the more recent changes in estate exemptions. It, basically, acts as a poor man's educational trust. It is a HUGE advantage for those who can do was you suggested.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: How much are you putting in a 529?

Post by LadyGeek » Sun Jan 07, 2018 3:52 pm

The discussion is getting derailed. Please stay focused on the investing aspects. Political conjecture and relationship issues (generational) are off-topic.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

analyticalron
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Re: How much are you putting in a 529?

Post by analyticalron » Sun Jan 07, 2018 4:37 pm

as someone who be opening a 529 fairly soon, what rate of return do ya'll estimate when deciding what to contribute?

lolbatross
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Re: How much are you putting in a 529?

Post by lolbatross » Sun Jan 07, 2018 5:26 pm

analyticalron wrote:
Sun Jan 07, 2018 4:37 pm
as someone who be opening a 529 fairly soon, what rate of return do ya'll estimate when deciding what to contribute?
Depends what you are trying to estimate. I use 2% real for growth vs college expense (I’m 100% equity). I use 8% nominal for estimating tax savings vs ltcg in taxable.

Historically the cost has risen by over 6% for the last several decades. Last year it was only 2%. Hopefully that continues.

raamakoti
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Re: How much are you putting in a 529?

Post by raamakoti » Sun Jan 07, 2018 5:41 pm

One kid - $1000 a month.

cusetownusa
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Re: How much are you putting in a 529?

Post by cusetownusa » Sun Jan 07, 2018 6:37 pm

Nothing

TonyUncleJohnny
Posts: 35
Joined: Wed Jan 03, 2018 4:02 pm

Re: How much are you putting in a 529?

Post by TonyUncleJohnny » Sun Jan 07, 2018 7:01 pm

One child, 2 years old. Started contributing max at age 1 (could've, and thus should've started at age 0!). Plan to contribute max ($30k this year and so on) each year for a total of 5 years into an age-based Vanguard fund, and let time and DCA do its thing. I forget exact allocation but it isn't too stock heavy given high market valuation currently and contributions being DCA'ed over a shorter period of time. When the market dips, I'll change AA to more equity.

By most estimates this should get us to 4 years of tuition at a private college.

Anyone see any problems with this plan? I could use a second set of eyes.

Thanks.

txranger
Posts: 87
Joined: Sun Jun 11, 2017 9:14 am

Re: How much are you putting in a 529?

Post by txranger » Sun Jan 07, 2018 11:52 pm

I put in 70k when my baby was about 6 months.

My ? Is can this $ be used for k12/elementary education worldwide/overseas or limited to the US. We r US expats living overseas. If it’s allowed, will put in another 15k this yr. I read the law, it does nt state it’s not allowed for overseas schools but does nt specify exactly.

How do I get a definite answer on this? My accountant does nt know, I asked.

Tnx appr

WhiteMaxima
Posts: 1007
Joined: Thu May 19, 2016 5:04 pm

Re: How much are you putting in a 529?

Post by WhiteMaxima » Mon Jan 08, 2018 9:58 am

I would rather leave an education trust fund to my heirs than leave a Farrari or speed boat windfall. Education is the best investment, in some sense it will beat 3 fund investment folio in terms of rate of $$$ return. The only things that limit 529 is its can be used for educational purpose only.
Last edited by WhiteMaxima on Mon Jan 08, 2018 10:33 am, edited 1 time in total.

Chadnudj
Posts: 705
Joined: Tue Oct 29, 2013 11:22 am

Re: How much are you putting in a 529?

Post by Chadnudj » Mon Jan 08, 2018 10:13 am

I have 2 kids (3, and just about 1). I've set it up so that I put $50 a month in each one's 529 automatically. I also move over credit card rewards/cashback into their accounts when I get a decent amount (basically every 2 months or so), and will contribute some when we get bonuses/tax refunds/found money, etc. Currently have a little around $5k and $1.5k in their respective accounts (one set of their grandparents also contribute to a separate 529 for them that I have no access to/information on, but which I'm very thankful for nonetheless).

Ideally, we'd contribute a lot more, and hopefully this year we'll get there. But we just (finally, after some admitted foot-dragging) got both of our 401ks up to the max, and we're saving for the down payment on our permanent house, and those are taking a bit more priority right now financially.

Plus, we're spending an INSANE amount on childcare -- nearly $3800 a month total. Presumably, when the kids are in (public) elementary school when we move to our "hopefully forever" home/town, that cost will disappear/be greatly reduced, and we'll use some of that freed up cash flow to max out 529s then. Ideally, we'll be able to do so this year courtesy of bonus money, but since that can/does fluctuate a great deal, I don't want to count on it (and thus don't do so).

EDITED TO ADD: Live in Illinois, where you get a $20k total for married couples deduction on state income taxes. Haven't exactly worked out how much we'll put in these accounts, but my wife and I both agree that we (a) value education a great deal, but (b) won't sacrifice our own retirement/future to pay for our kid's education and (c) want our kids to have some skin in the game when it comes to paying for college so they understand/appreciate the value of their education. Ideally, though, I'd like to have enough to pay for wherever they're qualified to go if they're serious about their education -- if we save too much, then with 529 rules regarding changing beneficiaries, we can help with either graduate studies, additional "fun" education for ourselves in retirement, or create a 529 fund for grandchildren down the road (which would be a pretty awesome legacy to leave).

birdog
Posts: 145
Joined: Fri Apr 07, 2017 1:35 pm

Re: How much are you putting in a 529?

Post by birdog » Mon Jan 08, 2018 11:41 am

Two kids. My state offers a tax incentive up to 5K so that is the what I contribute each year. Only have one account for the sake of simplicity. I plan to stop contributing at some point because I would rather under-fund than over-fund an account with use restrictions like this one.

shorty313
Posts: 39
Joined: Mon May 16, 2016 8:43 am

Re: How much are you putting in a 529?

Post by shorty313 » Mon Jan 08, 2018 12:27 pm

Two kids, 10 and 8. Have roughly $90k total. In the beginning we were putting in $200/mo per kid, but dropped that back to $100/mo per kid a few years ago to meet some other savings goals. Right now it's $125/mo per kid, and one set of grandparents also deposits $100/mo per kid. HCOL area, so we do what we can. Mortgage is due to be paid off in spring of the elder's first year, so that should free up a substantial amount to cash flow remaining.
Edit: No state incentive here.

cswenson
Posts: 11
Joined: Tue Feb 21, 2017 1:06 pm

Re: How much are you putting in a 529?

Post by cswenson » Mon Jan 08, 2018 2:52 pm

I have one child. She is 6 now. We currently have $8K in her 529 plan. We contribute $100 monthly. Occasionally, we put a few hundred bucks into the account when we receive bonus or extra money from whatever source. We do not intend to fully fund her college, but would like to have something to get her started. We expect her to take some responsibility of her college by working part-time during summers.
Last edited by cswenson on Mon Jan 08, 2018 3:09 pm, edited 1 time in total.

spartywrx
Posts: 1
Joined: Sat Nov 11, 2017 2:32 pm

Re: How much are you putting in a 529?

Post by spartywrx » Mon Jan 08, 2018 3:19 pm

Kids are expensive!

Aiming for 4 year cost of tuition at current (insane and unsustainable) college tuition rates in 18 years = $200,000 for a 4 year degree at a Big Ten U or equivalent= ~$10,000/yr x 18-19 years x 7-8% compounding interest in the 529.

Investments are 100% stocks now with a plan to follow the vanguard retirement target date funds allocations (eg more conservative in their teenage years) as we approach college time. There is a good possibility of grad school as well with degree inflation creep. Our kids will not qualify for federal aid, and my parents paid for mine so I figure its my responsibility to pass it on.

I guess there is some heavy incentive for me to educate them well so they get good scholarships, not just from a loving parent perspective, but then I can spend their 529 college money on a boat :sharebeer ! Other retirement investment accounts are maxed or close to it.

That is our goal, we are ramping up to it monthly and year to year.

deskjockey
Posts: 146
Joined: Sat Dec 03, 2016 11:15 am

Re: How much are you putting in a 529?

Post by deskjockey » Mon Jan 08, 2018 3:48 pm

ChrisC wrote:
Sat Jan 06, 2018 6:20 pm
deskjockey wrote:
Sat Jan 06, 2018 11:12 am
We put $8,000 into 529s for each of our two kids every year, and have done so since birth. This gives us a nice tax benefit in VA, since we use the Invest529 plan. We've got about $185K in their accounts as of now and plan to fund it until we have enough to fully pay for in-state attendance at UVA. If by then (in roughly 4 years, unless the market tanks) we've got a sense that one or both could shoot for the ivies, we'll continue funding the 529.
That's a lot of dough going towards financing postsecondary education. Times have a changed when we first started down that road in Virginia for our 3 kids, born in 1981,1984, and 1986. At that time we used EE Savings Bonds, initially, with the goal of having $25k for each kid at HS graduation. When 529 plans became available in 1997 in Virginia, they were limited to prepaid tuition plans for VA schools. So, at the time it made sense for us to buy one fully paid tuition contract.
Yes, times have unfortunately changed. I'm floored by how much colleges are charging these days. The inflation rate for schools is roughly double the CPI every year. A year of in-state tuition/room & board at UVA these days costs more than $30K, while out of state tuition is almost the same as the ivies (>$60K). That's why we've piled a fair amount into the 529s for our kids.

blueman457
Posts: 348
Joined: Sun Jul 26, 2015 12:19 pm

Re: How much are you putting in a 529?

Post by blueman457 » Mon Jan 08, 2018 3:53 pm

Putting about $10k/year (max state deduction) for my daughter. Not sure it’s even going to be enough to pay for books at this rate of rising college costs.

deskjockey
Posts: 146
Joined: Sat Dec 03, 2016 11:15 am

Re: How much are you putting in a 529?

Post by deskjockey » Mon Jan 08, 2018 3:55 pm

txranger wrote:
Sun Jan 07, 2018 11:52 pm
I put in 70k when my baby was about 6 months.

My ? Is can this $ be used for k12/elementary education worldwide/overseas or limited to the US. We r US expats living overseas. If it’s allowed, will put in another 15k this yr. I read the law, it does nt state it’s not allowed for overseas schools but does nt specify exactly.

How do I get a definite answer on this? My accountant does nt know, I asked.

Tnx appr
There is no definite answer to this question yet--the IRS needs to come up with the regulations that will cover this aspect of the new law. They should do that within a few months (maybe less). The current rules covering which colleges are eligible, however, are not encouraging, as they only allow you to use 529 funds for foreign colleges that have a federal school code (about 100 or so). If these rules are a guide, I wouldn't expect your kids' school to be eligible unless it is accredited in the US.

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