College in 2026

[PessOptimist]

All the info on this thread is good but seems to hang on the ability of some investment manager, educational institution or the whims of the US government.

What I need is a tool that will earn a modest amount of interest on post tax money, will have tax deferred earnings if used for education, can belong to the child and not be available to parents or grandparents for uses other than the child's education, and still be there in 18 years.

The 529's sound like they are managed by the same idiots who got us where we are today financially. Some limit you to one school. Coverdells expire next year and who knows where that will go.

Am I living in a fantasy world? Probably.

I brought the idea up when the child was born but non of the other "grands" responded. Any advice will be appreciated. Not talking about student loans here, rather a monetary instrument started now that will (hopefully) grow for the next decade or so.

 

[phil]

It depends on which state you live in. Some states have specific plans, and you can pay the entire cost of a 4 year college education up front. Virginia has one like that, as do other states.

Look up whether your state has the specific plan. Some are transferable to other universities, some are not, so read the fine print.

Other 529 plans are good, but as you've said, it depends on the state of the economy and the market.....when you put in and when you cash out. Just to let you know, the plans can also be cashed out if you decide not to use them. Sometimes they can also be transferred.

 

[James48843]

PessOptimist:

Arizona does 529 plans now.

STATE TAX INCENTIVE BILL PASSES!
Arizona Votes to Support Our Children’s Higher Education
(Phoenix, AZ) July 17, 2007 – The Arizona Legislature in the 2007 legislative session passed a new incentive offering a tax deduction to Arizona taxpayers contributing to a 529 college savings plan. It was signed by the Governor last week. What does this mean for Arizona families?

The bill, revived by Speaker of the Arizona House of Representatives, James Weiers, offers an income tax deduction to Arizonans who contribute to a 529 college savings plan. This allows contributions to a 529 plan to be deducted annually from Arizona State Income Taxes. Eligible individuals who are single and/or designated
as ‘head of household’ can deduct up to $750 annually while married individuals filing jointly can deduct up to $1,500 annual deduction. Arizona families can begin taking advantage of this starting January 1, 2008.

This new state tax incentive now allows Arizona residents using a 529 plan to save taxes in two ways. First, 529 plans assets grow tax-deferred and withdrawals are federal and Arizona State Income tax-free when funds are used for qualified higher education expenses. This incentive became a permanent with the passing of the
Pension Protection Plan of 2006. Second, the new incentive gives families a tax benefit on the front-end when they make contributions to a 529 Plan.

A list of participating 529 plans in Arizona:

http://az529.gov/AZ529Website_2009/index.html

You can do it a number of ways, including mutual funds, or CD's, or various other investments identified on that state government site.
You can manage which funds you want. The problem is going to be that most 529's don't allow you to move money around, except for once per year. Check with your state and these plans and see what rules they have. Mine only allows one change per year- since yours has mutual funds, they might allow more moves.

I put in every month, direct deposit, and have for years. Maybe you can talk the grandparents into chipping in $25 or $50 a month towards it- if they have the money they might. every little bit helps.

529's are savings programs, and are different that prepaid tuition plans. Prepaid tuition plans allow you to lock on tuition rates, but usually aren't transferreable to non-state schools. Some are only for a few schools.

529's, on the other hand, are usually investment accounts you can use anywhere. If it's used for a school, then it comes out tax free. If it is taken out and used for other than school, then taxes and penalties may apply.

I've been doing a 529 for about ten years now- not a lot, but hey, it's at least something.


Good luck.

 

[PessOptimist]

Thanks James and Phil.

I just came from Tribute to those who gave all. Thanks again James

 

[Callme_CO]

http://www.investopedia.com/university/retirementplans/esa/

I suggest and ESA