CD ladder in a 529 plan?

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Topic Author
alatxm
Posts: 1
Joined: Sun Jul 31, 2022 10:50 am

CD ladder in a 529 plan?

Post by alatxm »

I see several 529 posts and am feeling the pain too! I have one child starting his sophomore year in college and another starting her senior year in high school. Since they were born, both have had NYSaves 529 plans invested in the age-based Vanguard moderate grown portfolios and those have done very well...until this year. Both are down about 7% even invested in the income portfolios. This is money we really can't afford to lose because we don't have the entire amount for college saved for either of them and both will be in college overlapping for 2 years.

I've withdrawn my son's remaining account balance (about $10k) and will pay his housing bill with it, so his account is closed out and sitting safely in savings until the bill is due. We plan to cash flow the rest of his college expenses for the next 3 years and are just putting that money directly in savings for now. So the question is how to safely invest what's left of my daughter's account. I researched FDIC-insured 529 options which I didn't even know existed until last month (https://www.savingforcollege.com/articl ... an-options) and rolled over my daughter's balance (about $75k) to the FDIC-insured option at Utah's my529 to stop the bleeding. However, the return on this plan is under 1% right now, so while I am not losing money anymore it's hard to see it sit there when CDs and even my Ally bank accounts are paying better rates.

What I would love to find is a 529 with FDIC-insured CDs so I could do a CD ladder and set each CD with 1/4 of the funds to mature in July of the next 4 years as we need the money for her college tuition bills. I have searched this forum, the wiki, the Saving for College website and think there are only 2 options for this. The Indiana College Choice 529 has Fixed Rate CDs (1 yr - 2.75%, 2 yr - 3%, 3 yr - 3%) and the Ohio 529 plan has CDs with terrible rates (1 yr - 1%, all other maturities are 0.3%). Both roll into a 529 savings account on maturity. Are there any other options or solutions out there that I'm missing?

Thank you in advance for your help and advice.
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