529B Strategies

Discussion in 'Financial Planning' started by Scott Post, Oct 10, 2003.

  1. Scott Post

    Scott Post Guest

    We currently have a 529B for our daughter who will start college in
    10 years. It's on track to fully fund 4 years of college. Our son
    will start college in 13 years. My first inclination was to increase
    our contribution to my daughter's 529B to cover both the kids, knowing
    that I could transfer the leftover to our son. Is there any advantage
    to having only one 529B for two kids? If so, should it list the older
    or younger child as the beneficiary? How about having separate plans
    for each of the children? Does either way offer an advantage in terms of
    financial aid calculations?

    The second part of my question is how much to save. We can comfortably
    save for the full cost of both childrens' educations. The only problem
    with this is if one or both of them receives any financial aid I'd be
    hit with taxes + the 10% penalty on the leftover. Is there some way
    to estimate the likely financial aid so far in advance? Is there a
    rule of thumb for what percentage of the expected costs one should
    save in a 529B?

    I'm also curious what the general feeling is on the likelihood that the
    tax advantage of the 529B will be renewed after 2010? (anyone got a
    crystal ball?)

    Thanks.
    --
    Scott Post http://home.insightbb.com/~sepost/
     
    Scott Post, Oct 10, 2003
    #1
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  2. Scott Post

    BMS Guest

    The main advantage to having a 529 for each child is the maximum you put
    into each plan.

    The greatest risk down the road to 529 plans is how the tax free withdrawals
    are handled.


    "Scott Post" <> wrote in message
    news:QVmhb.441565$...
    > We currently have a 529B for our daughter who will start college in
    > 10 years. It's on track to fully fund 4 years of college. Our son
    > will start college in 13 years. My first inclination was to increase
    > our contribution to my daughter's 529B to cover both the kids, knowing
    > that I could transfer the leftover to our son. Is there any advantage
    > to having only one 529B for two kids? If so, should it list the older
    > or younger child as the beneficiary? How about having separate plans
    > for each of the children? Does either way offer an advantage in terms of
    > financial aid calculations?
    >
    > The second part of my question is how much to save. We can comfortably
    > save for the full cost of both childrens' educations. The only problem
    > with this is if one or both of them receives any financial aid I'd be
    > hit with taxes + the 10% penalty on the leftover. Is there some way
    > to estimate the likely financial aid so far in advance? Is there a
    > rule of thumb for what percentage of the expected costs one should
    > save in a 529B?
    >
    > I'm also curious what the general feeling is on the likelihood that the
    > tax advantage of the 529B will be renewed after 2010? (anyone got a
    > crystal ball?)
    >
    > Thanks.
    > --
    > Scott Post

    http://home.insightbb.com/~sepost/
    >
     
    BMS, Oct 10, 2003
    #2
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  3. Scott Post

    Wooglin Guest

    I would recommend establishing two accounts instead of combining it
    all into one. You always have the ability to transfer the balances
    back and forth between each child, and you will avoid hitting account
    maximums (which are north of $250K, usually not an issue) and account
    contribution limits per child.


    Based on the fact that the majority of America is not adequately
    funding their children's educations, and the fact that education is a
    HUGE hot button for political campaigns and re-elections, I would say
    that the current tax-treatment of 529's will continue status-quo
    indefinitely. However, the law is scheduled to sunset in 2010, so it
    will require the passing of new legislation to continue the tax
    treatment. This will occur.

    Wooglin






    (Scott Post) wrote in message news:<QVmhb.441565$>...
    > We currently have a 529B for our daughter who will start college in
    > 10 years. It's on track to fully fund 4 years of college. Our son
    > will start college in 13 years. My first inclination was to increase
    > our contribution to my daughter's 529B to cover both the kids, knowing
    > that I could transfer the leftover to our son. Is there any advantage
    > to having only one 529B for two kids? If so, should it list the older
    > or younger child as the beneficiary? How about having separate plans
    > for each of the children? Does either way offer an advantage in terms of
    > financial aid calculations?
    >
    > The second part of my question is how much to save. We can comfortably
    > save for the full cost of both childrens' educations. The only problem
    > with this is if one or both of them receives any financial aid I'd be
    > hit with taxes + the 10% penalty on the leftover. Is there some way
    > to estimate the likely financial aid so far in advance? Is there a
    > rule of thumb for what percentage of the expected costs one should
    > save in a 529B?
    >
    > I'm also curious what the general feeling is on the likelihood that the
    > tax advantage of the 529B will be renewed after 2010? (anyone got a
    > crystal ball?)
    >
    > Thanks.
     
    Wooglin, Oct 12, 2003
    #3
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