Move $ from brokerage to 529?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
airahcaz
Posts: 1523
Joined: Sat Oct 31, 2009 3:37 pm

Move $ from brokerage to 529?

Post by airahcaz »

A grandparent has college money invested in an SP500 index fund for his grandchild. Does it make sense to sell now, pay long term capital gains taxes at 15%, and invest the proceeds in an identical fund in a 529?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
mhalley
Posts: 8658
Joined: Tue Nov 20, 2007 6:02 am

Re: Move $ from brokerage to 529?

Post by mhalley »

The purpose of a 529 is to avoid paying taxes on the money. Depending on how many years until the money is to be used, it could make sense. If the child is 2, fine, 15, maybe not. Will the taxes be paid from the proceeds of the sale?
Gloucester Road
Posts: 6
Joined: Fri Dec 28, 2018 7:55 am

Re: Move $ from brokerage to 529?

Post by Gloucester Road »

Can the grandparent claim a state tax deduction for the 529 contribution?
Are the 529 plan fees/fund expense ratio reasonable?

The answers to those questions might tip the scale.
Thecallofduty
Posts: 90
Joined: Sat Jan 19, 2019 10:59 am

Re: Move $ from brokerage to 529?

Post by Thecallofduty »

Well, I think it depends. Probably need some numbers from OP to say.

Example.
10000 investment grew to 11k. 15% tax is 150 dollars

Put the money for 17 years in 529 is probably a good idea.


Really depends on the investment amount and capital gains amount. Obviously if orginal nvestmemt was 10k and grew to 25k, then tax is 2250 and likely not worth selling Now at least

Ill let smarter people chime in.
-thecallofduty
Post Reply