529 Child Savings plans

[cyfan964]

Looking for some advice on these. Currently just have money in savings accounts for my kids, but figure that is just a waste so looking into these. Is there any advantage to using the advisor option rather than just opening an account through the state personally? I think I'm reading that if the fund isn't used for education for the kids it can now just be rolled over into an IRA for them with no extra tax implications should my children just decide to join the workforce... is that correct?

 

[BCClone]

I just do my own. Pretty basic through Iowa 529.

 

[3TrueFans]

Seems to me that paying fees for the advisor one is not worth it, just use the normal state one and pick a fund you like.

 

[CYdTracked]

Just open one yourself online, it's pretty simple

ISave 529 Plan

ISave 529: For any dream. For any plan.

www.iowa529save.com

Big benefit of contributing to a 529 at least in Iowa you can deduct contributions from your state income taxes. Return rate has been pretty solid too IMO. We opened up account for both our kids the same year they were born and the accounts have grown well. They are currently in 6th and 3rd grades and our financial advisor (who does not administrate the accounts BTW) projects both are on pace to be able to fully fund going to a 4 year in-state university.

Just looked up what my oldest child's return rates have been

10 year: 11.02%
5 year: 9.48%
3 yr: 16.71%
1 yr: 19.48%

You are going do a lot better saving for college that way with those kinds of returns plus the added tax advantages too. Also, if you don't use all the funds you can either use them towards anyone else in your family education costs or now they recently made a change that you can roll those unused funds into a Roth IRA so that would essentially be setting them up with a retirement fund early

529-to-Roth IRA Rollovers: What to Know | Charles Schwab

 

[wxman1]

Incredibly simple and easy through the state. We are way late on getting some going for our kids but I just used a portion of our Fed return to do it last week.

 

[BCClone]

Just open one yourself online, it's pretty simple

ISave 529 Plan

ISave 529: For any dream. For any plan.

www.iowa529save.com

Big benefit of contributing to a 529 at least in Iowa you can deduct contributions from your state income taxes. Return rate has been pretty solid too IMO. We opened up account for both our kids the same year they were born and the accounts have grown well. They are currently in 6th and 3rd grades and our financial advisor (who does not administrate the accounts BTW) projects both are on pace to be able to fully fund going to a 4 year in-state university.

Tuition has went nuts the last couple years. From my kids grain 22 and 24 to my 3rd starting this fall, the numbers have shotup a lot

 

[NWICY]

If the kid is born this year aren't they supposed to get some free money from the Federal govt?

 

[cytor]

529 plans will vary state to state. I sell them along with tons of other insurance products. I started a 529 on my son about a month before he was born. I put in $200 a month. He's now in his 3rd year of college and I have all 4 years of school paid for with some left over. His current tuition is $25K per year.

Definitely a good idea to get one.

 

[wxman1]

I will also mention the thing I really liked about the Iowa one was it gave easy options to share a link/qr code etc. with others so they can contribute as well. Grandparents, relatives etc.

 

[CycloneDaddy]

Friendly reminder that the spouse can also setup a 529 plan so you can save twice as much.

 

[CYdTracked]

Tuition has went nuts the last couple years. From my kids grain 22 and 24 to my 3rd starting this fall, the numbers have shotup a lot

Yeah I have no idea what to expect in about 6 years when we get to that point. I am just glad that as part of their services our financial advisor is able to project based on our 529 accounts approximately how much we may be able to fund given certain cost scenarios. That's not even factoring in if they maybe get some kind of scholarship money to offset the costs too. Even ran a projection if they were to go to a private college and while not projected to be able to fully fund that it would cover a pretty good chunk of it. We don't necessarily need to fund 100% but our goal has been to at least fund a good portion of it and they hopefully can pay the rest themselves without going into debt. Gives me peace of mind to know we are on the right track to accomplish that and glad I set those up right away and not too late in the game to miss out on the earning potential.

My parents paid 50% of my college and I was fortunate enough to graduate debt free because of that. Some things I did to put myself in that position too was I got a part time job at 16 and worked about 20 hours a week during the school year and 40 all through summer when I could. I didn't go on any spring break trips in college, usually came back home and put 40 hours in over any breaks during college so was earning/saving money not spending it during breaks. I was a Resident Assistant in the dorms for 2.5 years which paid for my room and board plus a small stipend those years which actually covered more than 50% of my expenses those years. Also had 2 summer internships that paid fairly well.

 

[FarmerCy1]

If the kid is born this year aren't they supposed to get some free money from the Federal govt?

Every kid born for the next 5 years I believe it is, is entitled to a 530A account, with $1000 as seed money from the Feds.

 

[CYdTracked]

Friendly reminder that the spouse can also setup a 529 plan so you can save twice as much.

Any family members can as well so good way for grandparents to gift money while also helping out their tax situation too during retirement. My wife and I both have an account for each kid for this reason as have had times someone gifted us money to go towards the kids college funds so allows you to spread it out and get the full tax benefit. We had some years we'd max contributions for maybe 2 of the accounts but now just doing monthly scheduled contributions that don't come close to the max we could deduct. Right now I think it's $6100 per beneficiary account for 2026. So if you had 2 kids and each open accounts for them you could max out at $24,400 to deduct. Don't know many that are in a position to do that yearly but it's a nice perk to take advantage of.

 

[DSMCy]

Looking for some advice on these. Currently just have money in savings accounts for my kids, but figure that is just a waste so looking into these. Is there any advantage to using the advisor option rather than just opening an account through the state personally? I think I'm reading that if the fund isn't used for education for the kids it can now just be rolled over into an IRA for them with no extra tax implications should my children just decide to join the workforce... is that correct?

Not a ton of tax savings, but only the Iowa administered 529 plan allows for an Iowa tax deduction on the contributions

 

[CyWantsAWin]

529 growth is exempt from capital gains taxes if used for education expenses. So you get that on top of the Iowa income tax benefit.

 

[Skyh13]

If the kid is born this year aren't they supposed to get some free money from the Federal govt?

It’s a 530A plan, I guess when you file taxes you’ll be asked if you want to open one, and then supposedlyf this summer they’ll send the money.

 

[FarmerCy1]

It’s a 530A plan, I guess when you file taxes you’ll be asked if you want to open one, and then supposedlyf this summer they’ll send the money.

I didn’t know it asked when you filed- all I heard was that you had to complete “Form 4547” with the Treasury department to open one

 

[mustangcy]

Putting both of my kids through with a 529, worked really well. Just a basic account.

That all said, if my kids were under 10 I would make darn sure it transfers to a regular Roth if they don't go to college because I have a hard time believing the college system won't be falling apart in the next 5 years. I can see a future were ISU only has 10-15 thousand students. AI is going to be a wrecking ball to higher education.

 

[FLYINGCYCLONE]

Ok my first grand child will be here in 4-5 weeks. If I start one, can other family members put money in the one I start? Or do we start a second one.

 

[ackatch]

We have 529's for both of our kids. Super easy to do and manage and honestly get a really good return year over year.

I worked for a company when our first was born and they contributed $100/month to a 529 account. It was a great head start for her - wish we had that for our second born.