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RomeyT
LIF Infant
Member since 1/21 355 total posts
Name:
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Anyone decide against 529 plan?
Our kids are very little but DH and I are wondering if a 529 plan is right for us. If you have considered a 529 plan and decided against it can you please share why. Thank you.
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Posted 2/18/21 12:03 PM  |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Anyone decide against 529 plan?
Well, for NJ there is no state tax benefits associated with a 529 account, so I found it pointless for us to tie up money like that with zero beneficial treatment. I think it is different if you live in a state where you get tax benefits from it.
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| Posted 2/18/21 4:41 PM |
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nycbuslady
LIF Adult
Member since 9/15 1066 total posts
Name:
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Anyone decide against 529 plan?
If you get a 529, you have to make sure you get one that is tax deductible in your state. We have one for our daughter and since we still have a few more years before we need it, we have it in higher risk funds. This past year, the stock market did so well and it went up a lot!
You really have to put money that you don't "need" right now (or in the near future) in it. If saving for a 529 means that you're putting day-to-day expenses on credit cards or can't save for other nearer-term goals, then definitely don't do it. But, if you have some money that you can save long-term, I would do it. JMO
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| Posted 2/18/21 5:52 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Anyone decide against 529 plan?
In NY you can deposit up to 10k a year tax free as long as it's a NYS based 529. Not sure if 10k is per child or not.
If you are in a higher income bracket this money comes off the top so it makes a difference at tax time. Like the PP I am in more traditional higher risk funds and have done very well recently.
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| Posted 2/18/21 6:42 PM |
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Mrs213
????????
Member since 2/09 18986 total posts
Name:
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Anyone decide against 529 plan?
I opened a high yield savings for both children (although they arent earning much these days) I wanted to make sure they have the option to use the money for other things in case they dont onto college
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| Posted 2/18/21 6:50 PM |
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RainyDay
LIF Adult
Member since 6/15 3990 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by LSP2005
Well, for NJ there is no state tax benefits associated with a 529 account, so I found it pointless for us to tie up money like that with zero beneficial treatment. I think it is different if you live in a state where you get tax benefits from it.
Oh this is good to know!
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| Posted 2/18/21 7:02 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Anyone decide against 529 plan?
Posted by Mrs213
I opened a high yield savings for both children (although they arent earning much these days) I wanted to make sure they have the option to use the money for other things in case they dont onto college
You can take money out of a 529 without going to college, the penalties are really minimal.
https://www.savingforcollege.com/article/college-savings-penalties
This article explains a lot in detail, but to make a long story short you are only paying taxes on the gains made and not the money you put in. The money you put in was already post tax money so that doesn't get double taxed. Also your child is the one taking the distribution since it's in their name. Their tax bracket will be a lot less at that time most likely.
At worst you break even (they pay back some of the NY taxes you saved) and even then they may not pay much tax or penalties at all. At best you saved a ton of taxes.
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| Posted 2/18/21 9:01 PM |
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MrsWoods
LIF Adult
Member since 4/12 1461 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by Mrs213
I opened a high yield savings for both children (although they arent earning much these days) I wanted to make sure they have the option to use the money for other things in case they dont onto college
Same! There is a penalty if you take it out for non college expenses. Didn't want to lock into something when who knows what the future holds for our child.
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| Posted 2/18/21 9:31 PM |
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Anyone decide against 529 plan?
I have a 529 for each child I put in money automatically from my paycheck. I like the 529 for the tax benefit for NY. My FIL also puts money in monthly for my boys. I have a small savings account for each that I randomly put money in; I’m not sure why. Last year I opened a Roth IRA for myself for the first time and researched more about them so I opened one for each of my kids in my name for now. Again, I’m not sure what I plan with the Roth for them, just hoping to I guess gift it to them? My kids just turned 4 so I have time. It’s been on my list to meet with a financial advisor but, ya know covid so for now I just have my auto deposits into the Roth and the 529 and I’ll figure it out eventually!
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| Posted 2/19/21 1:00 PM |
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aliwnec10
mom of 3 boys
Member since 4/06 11426 total posts
Name:
Ali
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Re: Anyone decide against 529 plan?
Honestly I would do it. You can transfer the funds from account to account so if 1 kid doesn't go to college, then it can be used for your other child. You don't lose the money if they don't go to college. You just pay a tax on the earnings, not the whole amount.
So for example:
my 9 year old has $74k in his. $34k of that is the earnings. A regular savings account wouldn't give you anywhere near that.
Message edited 2/19/2021 1:01:56 PM.
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| Posted 2/19/21 1:00 PM |
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seaside
LIF Adult
Member since 6/08 3101 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by aliwnec10
Honestly I would do it. You can transfer the funds from account to account so if 1 kid doesn't go to college, then it can be used for your other child. You don't lose the money if they don't go to college. You just pay a tax on the earnings, not the whole amount.
So for example:
my 9 year old has $74k in his. $34k of that is the earnings. A regular savings account wouldn't give you anywhere near that.
We feel the same. The tax free growth/time value of money factor makes it an east choice. It's a tremendous wealth building vehicle that people underestimate.
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| Posted 2/19/21 2:05 PM |
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MrsWoods
LIF Adult
Member since 4/12 1461 total posts
Name:
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Anyone decide against 529 plan?
I also wanted to add that if your child has a 529 account they will receive less financial aid for college. Colleges count 529 as income. So be aware of that. So if you don't think you will have enough money saved up to pay for all expenses, be aware that student may have to shell out some extra money to pay it.
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| Posted 2/19/21 7:39 PM |
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soontobemommyof2
My boys...my everything <3
Member since 4/15 3635 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by MrsWoods
Posted by Mrs213
I opened a high yield savings for both children (although they arent earning much these days) I wanted to make sure they have the option to use the money for other things in case they dont onto college
Same! There is a penalty if you take it out for non college expenses. Didn't want to lock into something when who knows what the future holds for our child.
What are u doing instead?
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| Posted 2/19/21 7:46 PM |
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Mrs213
????????
Member since 2/09 18986 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by aliwnec10
Honestly I would do it. You can transfer the funds from account to account so if 1 kid doesn't go to college, then it can be used for your other child. You don't lose the money if they don't go to college. You just pay a tax on the earnings, not the whole amount.
So for example:
my 9 year old has $74k in his. $34k of that is the earnings. A regular savings account wouldn't give you anywhere near that.
Is there someone I should talk to about opening one IF I do? I wouldn't want to go blindly into this. I have many questions
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| Posted 2/19/21 10:31 PM |
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aliwnec10
mom of 3 boys
Member since 4/06 11426 total posts
Name:
Ali
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Re: Anyone decide against 529 plan?
Posted by Mrs213
Posted by aliwnec10
Honestly I would do it. You can transfer the funds from account to account so if 1 kid doesn't go to college, then it can be used for your other child. You don't lose the money if they don't go to college. You just pay a tax on the earnings, not the whole amount.
So for example:
my 9 year old has $74k in his. $34k of that is the earnings. A regular savings account wouldn't give you anywhere near that.
Is there someone I should talk to about opening one IF I do? I wouldn't want to go blindly into this. I have many questions
https://www.nysaves.org/
They have a number you can call so feel free to ask all the questions you need. Lots of good info on their site too. Check it out.
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| Posted 2/19/21 10:37 PM |
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Re: Anyone decide against 529 plan?
Posted by aliwnec10
Posted by Mrs213
Posted by aliwnec10
Honestly I would do it. You can transfer the funds from account to account so if 1 kid doesn't go to college, then it can be used for your other child. You don't lose the money if they don't go to college. You just pay a tax on the earnings, not the whole amount.
So for example:
my 9 year old has $74k in his. $34k of that is the earnings. A regular savings account wouldn't give you anywhere near that.
Is there someone I should talk to about opening one IF I do? I wouldn't want to go blindly into this. I have many questions
https://www.nysaves.org/
They have a number you can call so feel free to ask all the questions you need. Lots of good info on their site too. Check it out.
I use NYSaves too. I have the 529 direct plan for each of my kids. Also if you are a state employee I believe it can be deducted directly from your paycheck; that’s how I fund mine. There’s so much info out on their site but you can absolutely call and I talked to my accountant about it as well before I signed up 
Also to add, I agree that the 529 is an awesome way of saving. My twins just turned 4 and have more than I ever thought they would at this age. Growth has been great thus far; 2020 in particular their accounts did extremely well
Message edited 2/20/2021 12:38:52 PM.
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| Posted 2/20/21 12:36 PM |
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Dreamer27
LIF Zygote
Member since 6/18 46 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by MrsWoods
I also wanted to add that if your child has a 529 account they will receive less financial aid for college. Colleges count 529 as income. So be aware of that. So if you don't think you will have enough money saved up to pay for all expenses, be aware that student may have to shell out some extra money to pay it.
LI’s high cost of living/salaries almost ensures our kids aren’t going to get much if any need-based aid anyway. If you own a home, drive new cars, go on trips etc you should also IMO be funding 529s. Any incremental difference this makes as assets on a FAFSA is better than student loan debt down the road.
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| Posted 2/20/21 1:00 PM |
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PitterPatter11
Baby Boy is Here!
Member since 5/11 7619 total posts
Name:
Momma <3
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Re: Anyone decide against 529 plan?
Posted by Dreamer27
Posted by MrsWoods
I also wanted to add that if your child has a 529 account they will receive less financial aid for college. Colleges count 529 as income. So be aware of that. So if you don't think you will have enough money saved up to pay for all expenses, be aware that student may have to shell out some extra money to pay it.
LI’s high cost of living/salaries almost ensures our kids aren’t going to get much if any need-based aid anyway. If you own a home, drive new cars, go on trips etc you should also IMO be funding 529s. Any incremental difference this makes as assets on a FAFSA is better than student loan debt down the road.
This. The benefits outweigh the small decrease in financial aid you may encounter.
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| Posted 2/20/21 1:08 PM |
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MrsWoods
LIF Adult
Member since 4/12 1461 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by Dreamer27
Posted by MrsWoods
I also wanted to add that if your child has a 529 account they will receive less financial aid for college. Colleges count 529 as income. So be aware of that. So if you don't think you will have enough money saved up to pay for all expenses, be aware that student may have to shell out some extra money to pay it.
LI’s high cost of living/salaries almost ensures our kids aren’t going to get much if any need-based aid anyway. If you own a home, drive new cars, go on trips etc you should also IMO be funding 529s. Any incremental difference this makes as assets on a FAFSA is better than student loan debt down the road.
Not everyone on LI is rich. Some are just middle class like myself and many are lower. There are many ways of saving besides locking your self into a 529. I suggest anyone to speak to a financial advisor first. I always say if its too good to be true, sometime it is.
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| Posted 2/20/21 5:54 PM |
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Bebelove
LIF Adolescent
Member since 8/12 742 total posts
Name:
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Re: Anyone decide against 529 plan?
No 529 for us. I’ve watched too many people in their early to mid 50’s lose their higher paying jobs. Money tied up in a 529 is not going to work for us. We have Brokerage accounts and real estate to pay for college. If there is a job loss, kids will need financial aid / loans
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| Posted 2/20/21 7:03 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Anyone decide against 529 plan?
I just want to say, we save outside of 529in regular brokerage accounts. I am not saying don’t save. I am saying look to see what the actual benefit is to your family.
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| Posted 2/20/21 8:50 PM |
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2girlsforme
LIF Adult
Member since 8/06 3071 total posts
Name:
XXXXXXXXX
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Re: Anyone decide against 529 plan?
Posted by Dreamer27
Posted by MrsWoods
I also wanted to add that if your child has a 529 account they will receive less financial aid for college. Colleges count 529 as income. So be aware of that. So if you don't think you will have enough money saved up to pay for all expenses, be aware that student may have to shell out some extra money to pay it.
LI’s high cost of living/salaries almost ensures our kids aren’t going to get much if any need-based aid anyway. If you own a home, drive new cars, go on trips etc you should also IMO be funding 529s. Any incremental difference this makes as assets on a FAFSA is better than student loan debt down the road.
We were never going to qualify for need based aid and frankly can afford to pay for college but I hired a college consultant when my oldest child was applying to college, who groaned when he saw my 529. My daughter was a good student, who was always going to get merit and was also a recruited athlete. However, the consultant left me with the impression that aid can sometimes be fungible and that if you are dealing with a school that isn’t transparent about their merit rubric or athletic awards, you could be hurting your child. Needless to say, we negotiated the hell out of her offers and don’t have a 529 for my younger child.
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| Posted 2/21/21 7:25 PM |
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LittleDiva
LIF Adult
Member since 9/11 1284 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by Bebelove
No 529 for us. I’ve watched too many people in their early to mid 50’s lose their higher paying jobs. Money tied up in a 529 is not going to work for us. We have Brokerage accounts and real estate to pay for college. If there is a job loss, kids will need financial aid / loans
That was our thinking as well.
I’m trying to raise well rounded kids involved in sports, music, honor societies, etc...and hoping they get awarded scholarships. And obviously we have money put away for them.
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| Posted 2/21/21 8:46 PM |
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lululu
LIF Adult
Member since 7/05 9511 total posts
Name:
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Re: Anyone decide against 529 plan?
We have three kids and have a decent amount of money in their 529 plans. My kids are in 7th, 5th and 3rd. My thought is I can move money from one kid to another should they not need what is in there. The money can also be used for private high school, any post high school education including trade schools, and graduate school expenses I believe. With the costs of college today I can not imagine we will have enough in there to cover everything for all three kids regardless. If by some miracle of God we have extra I will transfer it to one of my nieces or nephews.
I definitely agree that each family situation is different and you have to make a very individual decision when it comes to saving for college and finances as a whole.
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| Posted 2/21/21 9:14 PM |
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lululu
LIF Adult
Member since 7/05 9511 total posts
Name:
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Re: Anyone decide against 529 plan?
Posted by LittleDiva
Posted by Bebelove
No 529 for us. I’ve watched too many people in their early to mid 50’s lose their higher paying jobs. Money tied up in a 529 is not going to work for us. We have Brokerage accounts and real estate to pay for college. If there is a job loss, kids will need financial aid / loans
That was our thinking as well.
I’m trying to raise well rounded kids involved in sports, music, honor societies, etc...and hoping they get awarded scholarships. And obviously we have money put away for them.
Does anyone know how hard it is to get scholarships? I feel like when we were in school it was fairly common. I know that athletic scholarships are nearly impossible to get now but are there decent opportunities to get merit based scholarships? My oldest is only in 7th so I am not at the point of looking into this yet.
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| Posted 2/21/21 9:16 PM |
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