Originally Posted by myselff77:
For those parents out there... Do you have a 529 account to save for college?
I'm in an interesting situation being in my early 40's before having kids (only 1). I currently have a Roth, but I'm not close to maxing it out. By the time my son is ready for college, I'll be 60 and in theory can tap into the Roth funds.
Is there any reason to put money into a 529 before maxing out my Roth IRA? From what I can tell, both are very similar, but the 529 can only be used for education otherwise there may be a penalty/tax hit to withdraw the funds.
Seems like I should focus more on the Roth given my age. If I'm not missing anything, it gives me the option of using that money for college bills for the little guy or still have the option to use the money for anything else, without penalty, if the college outlook changes 18 years from now. Anything I'm missing? Thoughts?
I'd stick it in the Roth. It is far less restrictive. In your case, you might look at a Traditional after you max out your Roth. That will give you a tax benefit in the short term and have similar outcomes at college time, although the withdrawls would be taxable.
I looked into a 529 plan and concluded the same thing. [Reply]
Originally Posted by myselff77:
For those parents out there... Do you have a 529 account to save for college?
I'm in an interesting situation being in my early 40's before having kids (only 1). I currently have a Roth, but I'm not close to maxing it out. By the time my son is ready for college, I'll be 60 and in theory can tap into the Roth funds.
Is there any reason to put money into a 529 before maxing out my Roth IRA? From what I can tell, both are very similar, but the 529 can only be used for education otherwise there may be a penalty/tax hit to withdraw the funds.
Seems like I should focus more on the Roth given my age. If I'm not missing anything, it gives me the option of using that money for college bills for the little guy or still have the option to use the money for anything else, without penalty, if the college outlook changes 18 years from now. Anything I'm missing? Thoughts?
Financial Planners generally will tell you not to use your retirement funds for a child's education. They would say to open the 529 and keep your Roth for you. [Reply]
Originally Posted by petegz28:
Financial Planners generally will tell you not to use your retirement funds for a child's education. They would say to open the 529 and keep your Roth for you.
I would say that is assuming you can fully fund the Roth. If you can only put away 6k a year, put it in the Roth. No reason to put 3k into 529 and 3k into Roth. If your kids decides not to go to college or gets scholarships you will end up losing money or finding alternate uses for it (grandkids, neices/nephews). [Reply]
Originally Posted by myselff77:
For those parents out there... Do you have a 529 account to save for college?
I'm in an interesting situation being in my early 40's before having kids (only 1). I currently have a Roth, but I'm not close to maxing it out. By the time my son is ready for college, I'll be 60 and in theory can tap into the Roth funds.
You can withdraw your contributions to your Roth at any time without a tax penalty. Its investment income you cannot withdraw without taking a hit.
Part of my divorce decree states that I am on the hook for providing each of my 2 kids 5k/year towards college( 4 years). I sat down and and did the math that this meant I needed to start putting away $250 a month immediately for this to not impact me. Fresh out of the divorce I wasn't putting anything away towards retirement. I put that 3k/year in my Roth knowing I could accumulate some retirement $ assuming investments paid off. I'm in a better place financially now and will likely max my Roth this year. I'll start looking for another place to put that money. Ideally I may be able to put away the entire amount I need for their college without having to touch the Roth, but its still there if I need it. [Reply]
Originally Posted by Chazno:
I would say that is assuming you can fully fund the Roth. If you can only put away 6k a year, put it in the Roth. No reason to put 3k into 529 and 3k into Roth. If your kids decides not to go to college or gets scholarships you will end up losing money or finding alternate uses for it (grandkids, neices/nephews).
Minor point of clarification that 529s are actually fairly flexible on what "college" means in this case. Trade schools, votechs, community colleges, or even lifelong learning courses are eligible, as well as the supplies needed to support that education (e.g., books). So if you think your kid will do ANY sort of post-secondary education, it will likely work.
But that said, it would obviously not be efficient to put $100k into a 529 if your kid ends up doing an associate degree at a CC for $15k instead.
Finally, to the topic of Roth vs. 529, I'd generally agree that the Roth is probably the main priority in the case of someone who can withdraw at the time the college funds would be needed. However, look into your own state's 529s. Some of them offer extra benefits. Colorado, for example, lets you deduct state taxes from contributions, which can make it slightly more attractive in certain situations. [Reply]
Originally Posted by lewdog:
Oh no, down a few percentage points from all time highs!!!
Oh Noez!!!!
I'm planning to retire at the end of 2023 - I'll be 56 years old. I'd like the market to keep humming the next 2+ years in order to have 'no ragrets'. So yeah, BOOO HOO for me. :-) [Reply]
Originally Posted by ChiTown:
I'm planning to retire at the end of 2023 - I'll be 56 years old. I'd like the market to keep humming the next 2+ years in order to have 'no ragrets'. So yeah, BOOO HOO for me. :-)
I’d definitely be pretty conservative if I was that close to retirement. [Reply]
ILUS up another 33.8% Now up 668% on my initial investment.
In hindsight I wish I'd sold everything I owned and borrowed another 10 million dollars to invest it all in this one play. Oh well. maybe next time. [Reply]
LOL, you know whats funny as hell??? I'm up quite a bit so today it went to .39 so I said I'm gonna be smart and put a stop loss on just enough shares to cover my basis at .35 in case it tanks. Within the HOUR it dropped straight down to .35 took me out and went straight back to .38 :-). I just shook my head as this has happened 100 times before. I bought back the shares I lost plus 2000 more at .38. Basically threw $300 in the trash.
Lew would be proud of me for having a plan though! [Reply]