Too much $$$ in a 529 plan???

[rktect1]

So i am starting to wonder if there is a thing of having too much in a 529 plan. Any thoughts on a number?

i have two kids and i have socked away already 90k for one who will go to college in 4.5 years. The other childs account has 60k in it and has 8.5 years until college. Is this going to be too much? Final numbers by college age look to be about $125k and 140k unless everything falls apart.

But lets say they go to a state school or get a partial scholarship? Leaving a large dollar amount in the fund. Could i hold that account for my childrens children?

 

[evilanne]

So i am starting to wonder if there is a thing of having too much in a 529 plan. Any thoughts on a number?

i have two kids and i have socked away already 90k for one who will go to college in 4.5 years. The other childs account has 60k in it and has 8.5 years until college. Is this going to be too much? Final numbers by college age look to be about $125k and 140k unless everything falls apart.

But lets say they go to a state school or get a partial scholarship? Leaving a large dollar amount in the fund. Could i hold that account for my childrens children?

Good job in planning for their education. It all really depends on your children and where they go to college. If one doesn't need as much as set aside or decides not to go to school, the money can be transferred to another family member. See Chapter 8 of IRS Publication 970 on Qualified Tuition Plans (QTP) https://www.irs.gov/pub/irs-pdf/p970.pdf The section on Rollovers indicate eligible family members.

 

[burrocrat]

well in about 4 years you can adopt my kid if you want...

 

[McDuck]

If the money is not used for college expenses by a relative, when the money is taken out of the account then taxs must be paid on gains PLUS a 10% penalty.

 

[rktect1]

If the money is not used for college expenses by a relative, when the money is taken out of the account then taxs must be paid on gains PLUS a 10% penalty.

How will they decide which portion was "gains" The gains are what I want to spend on college first. If anything is leftover, that was my initial investment.

It has been about 9 months since I originally posted this and their accounts now have $104k and $70k I would say that its been a good nine months for certain. I moved the $104k out of Upromise and into Vanguard 529 plan and its now in a medium/low growth fund. Just need 5% plus my contributions and he will have about $140K when he starts school. I have eight more years to grow the $70k into $140k which seems doable to me unless the economy collapses like 2008

 

[McDuck]

That is awesome. I researching it for my grandkids, 4 and 1 years old.

 

[rktect1]

That is awesome. I researching it for my grandkids, 4 and 1 years old.

I started these basically once I had their social security numbers. $300 per month religiously.

 

[nasa1974]

That is awesome. I researching it for my grandkids, 4 and 1 years old.

We are looking into it also. A 3 year old, almost 4 and two more on the way.

 

[nasa1974]

I started these basically once I had their social security numbers. $300 per month religiously.

A great investment.

 

[esswun]

Which state's 529 are you in? Your own state or another's?

You've done very well IMO. If you don't spend it all for your kids, then yes I do believe you can use the remaining money for a family member's (grandkids) education in the future. When your own kids are done, perhaps you can reduce your monthly contribution and let the funds work on increasing the balance for grandkids since you will have many years for it to grow. If you can afford it, just contribute the same amount. What a great position to be in to create this generational wealth and benefit your family tree!

 

[Zorro]

I started these basically once I had their social security numbers. $300 per month religiously.

Hi rktect1,

I am also curious about this ... if you can answer my 2 Qs ... it can Help me in my endeavor ...

Q1: Which State Plan are you using? Or do you use Outside 529 plan ... like Vanguard, Fidelity or etc?

Q2: If it is State 529 Plan ... what Option / Plan are you using?

Thanks in advance! :smile:

 

[RazorCat]

We have a 529 for each of our granddaughters that were started at ages 5, 3, and 1. Been a wonderful investment to help with their future education expenses. They’re invested in American Funds. We’ve invested $100.00 per month per account for well over 10 years. My son almost fell out when he saw how much they had amassed.

 

[Zorro]

Thanks RazorCat.:smile: Your reply actually provided me with helpful insight.

 

[Scout333]

Great idea! We have been contributing for our grandchildren since they were born! The more you can front-end load the accounts the more efficiently they will grow! We put in $1000 for their first birthdays, $500 for 2nd, $250 for 3rd, 4th, 5th, and 6th birthdays. $100 each birthday after that. Amazing the growth these plans have had! Unfortunately I wasn't smart enough to front-end load my retirement accounts as well. LOL

 

[Bullitt]

The general rule is you can finance college but not retirement.

Saving for a 529 is a great idea and will even provide a state tax break, but shouldn't come before planning to knock down debts and save for retirement.

 

[Bullitt]

We've tried to tell people to give money for the 529 for the kids birthdays and Christmas, but they insist on buying them more crap. There's only so much stuff they can put on a wish list that they really want. 60% of it is just filler so everyone has something to buy. Amazing the stuff we've thrown out that was literally never touched since the week it was opened. Honestly, it makes me sad to see that kind of waste in this world when there are so many in need.

Note to grandparents: Every little bit for the 529 helps in the long run. Plus, you can reduce your state taxes (at least in NY you can.)

 

[Scout333]

Just an idea, the more you contribute when they are babies the more it will grow before they get to college and need the money! My wife and I started a program for our grandchildren that we contribute to on their birhdays every year which is front-end loaded. i.e. $ 1000 for year 1, 500 for year 2, 250 for years 3 - 6, $ 100 for remaining years until they start college, etc. My son has started 529 plans for each child which are doing very well. The more you put in early the longer it can be invested. Concept works great for retirement funds as well. Unfortunately I didn't learn this when I was in my twenties. Good luck TSPr's!