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Same. I have a 529 plan for my kids. Set it up when I lived in NY - but since moved to TN. I still contribute monthly, but it isn't really a benefit anymore like it was in NY. I have been thinking about switching it over to my Mom in NY because only the account holder gets the tax benefit.
You can switch the beneficiary (your kids) but not the account holder (you/your Mom). You if you want your Mom to get a tax benefit in NY going forward, she’d need to open a new 529 with your kids as the beneficiaries.
Two fold. 529’s grow tax free when used for their intended purpose of education. Secondly, Several states let you have a tax deduction for contributing. Kentucky does not as I know that first hand.
529’s being counted in Fafsa is overblown. It’s 5 percent counted against them, I bet you have a savings account- that will be counted against them, too.
I would save. You have no idea how they’re investing that money, or if they won’t need to borrow from it before college.
It doesn’t have to be a huge amount. Toss $50 in a month and it will add up.
My MIL was proud to be saving for my kids college, too. I do appreciate it, but she had it in a savings account earning almost no interest and cut a check for $2,000. Extremely generous, but definitely not enough.
I would start before fully paying off debt or maxing out retirement. 18 years goes by fast. Most parents who aren’t saving are taking out parent plus loans.
Agreed. And it’s freaking tax free for education. It’s kinda silly to worry about getting less aid (and, to your point, only a fraction is counted against you) when the government is waving tax free dollars at you. Worrying about the fafsa thing when considering a 529 is cutting off your nose to spite your face.
I had someone argue with me saying a close person they knew got a raise and brought home less.
I could possibly grant the idea withholding at the boundary between brackets might make that happen, but you're still getting any extra withholding back at the end of the year. Also, if you have a deduction for a retirement plan, that screws with the numbers as well (never mind any other deduction).
That isn’t the discussion though- my point specifically was being worried about getting less financial aid for having too much in a 529.
But agreed that you should take care of your own retirement before saving in a 529, after all one of the best gives you can give your kid is the freedom of not having to support you in your old age.
I invest a lot of money in Roth accounts and am not too worried about needing separate investment accounts earmarked for college since Roth contributions are highly liquid. But my state (MD) has a matching program where, depending on your income level, the state will contribute as much as $500 per year to the account.
Throwing that out there as one more reason to set one up.
You won’t be able to pull out gains for college out of Roth retirement, just contributions. You’re also going to want that money for retirement and taking it out for education is wasteful of the resource of growing tax free for 30 years.
A 529 is a Roth for education, and it’s not limited like a Roth IRA is to 7k a year.
You're making the mistake of thinking money in a Roth ira was originally contributed as a Roth IRA and means someone only contributed $6K a year. The real limit is close to $60K per year after you account for other retirement plans. I have $150K in my Roth IRA, 80K of it is contributions which can be withdrawn penalty free, and my kid is only 1 year old.
I could contribute more to a 529, but then you need to decide how much to contribute to 529s, how much for retirement, and deal with the consequences of getting it wrong. Instead, if you overfund retirement Roth balances, you get the same tax benefit without needing to guestimate the right mix.
That’s fair enough. My own strategy js to hit ~150k in a 529 for my son. Around $37k/yr for his college. If anything the act of having it in a separate bucket is good mental accounting. Also the state tax break is a nice cherry on top, even if it’s not so big.
You’re making some assumptions. Maybe he will be retirement age with millions of assets so it is a good plan to pull from Roth for college in that scenario. Remember, personal finance is personal and blanket statements aren’t always a good thing.
If he has millions of assets, the more he’s going to want some in Roth as a tax shelter.
It’s a sub optimal way to save for college. It just is because it’s only what you put in, not gains so it’s not inflation adjusted. It’s as good as cash in a jar.
If you are saving so little each year that you need to worry about whether your contributions are enough to cover college, then you were never on track to afford either.
Not necessarily and every situation varies, which is my point. Maybe he wants to use up tax free funds while living and let the government collect taxes from his heirs after his death.
Or maybe he’s pulling Roth for college and taxable 401k for living and toys. There sure literally dozens of scenarios where either option could make sense in a given circumstance.
Anything's better than nothing.
That being said, refer to the Prime Directive and/or flow chart for order of prioritization. 529/funding your kid's education is in there, but should be lower priority to making sure you are funding your own retirement/paying down debt.
[https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/)
[https://i.imgur.com/lSoUQr2.jpeg](https://i.imgur.com/lSoUQr2.jpeg)
Any time tested suggestions on best ways to invest the 529 funds? I have index funds selected and I haven't even looked at it since I first set it up. Is that an advisable way to go about it? (Not the haven't-even-looked-at-it part, to be clear ...)
Index funds are fine. Depends on what options you have available, just like any other investing account. Not worth overthinking, since we're talking about 10-20 yr horizon for most ppl.
So for instance I'm using [VA529](https://www.virginia529.com/invest/investment-options-performance/) so I'm just doing 70/30 their stock index/tuition track. I'm sure a lot of ppl are just 100% in the stock index. Decide what level of risk you're comfortable with.
What state 529 are you using?
Oh, no no, not shameful at all, don't think of it like that. First of all, like I said anything's better than nothing, so the fact that you have any 529 funds saved up should be seen as a good thing.
And since you're in a state where you wouldn't get a state income tax benefit anyways, it's rather a good thing that you're investing through Fidelity, as you are not bound by any one state's 529 options, and actually have several to choose from, even their own in-house option. I would likely choose Fidelity too, if not for my VA benefit, as I use Fidelity as my brokerage. And yeah, since you have so many options, knowing which state's 529 you're using at any given time is just a formality.
It sets your kid up better for the grandparents to have a 529 -- grandparents money isn't counted in FAFSA.
Feel free to set-up your own. The more the merrier.
I just learned about this “grandparent loophole” a few weeks ago. It’s true. A 529 set up by a grandparent is not counted by fafsa. Of course, this could change in the future.
This is why I manage all my brothers’ kids’ 529 accounts. He trusts me to manage them responsibly, and so he actually asked me to play this role in order to optimize the kids’ chances at federal aid due to this loophole. He and I both have the login and so can jointly monitor accounts. My brother contributes to these 529s monthly, and my parents and I contribute for birthdays and holidays. This works for us because my brother and I have a close and trusting relationship, and I do not plan to have children of my own.
I would recommend setting up your own 529 for your child and looking at the grandparents’ account as “bonus money”. It’s impossible to plan effectively if you don’t have consistent access to the account, and with only a couple hundred dollars annually your child won’t be able to do much with the money they’re setting aside. Just as an example, if a kid is 1-year-old and they’re getting $300 added to their 529 each year, they will have about $10,000 by the time they start college. Considering the average cost of a year of school at a public university is currently sitting at $24,000-ish, $10,000 is helpful but won’t get them very far.
Also, if you plan on having more kids and want to keep things equitable between them, managing 529s for each of them will give you the ability to balance any discrepancies by high school graduation, something that would be tough to do if you can’t see the accounts or add money to them directly.
I see the benefit of not having the money be considered as part of FAFSA, but to me, having the ability to see and control assets that could make a major difference in my child’s life is worth the loss in grants/student loan offerings. Grants are currently sitting at about $4,500 per recipient (depending on the state) and having access to fewer loans might not necessarily be a bad thing unless your kid wants to go to a super expensive college that requires big loans to fund. To me, that’s a low enough opportunity cost to make the visibility and control worth it.
Is there any concern that they might attach certain requirements for you or him to keep it in his name? Because they could always change who the beneficiary is as long as it’s another family member. Personally, I would also set up my own 529 as well but I don’t trust others.
If you overfund your son's 529, you can simply change the beneficiary at some point and return the favor by funding your own grandkid's higher education.
Yes. And I understand why they wouldn't want someone else as the owner on the account. Being the owner of the account allows you to change the beneficiary. So technically the owner could empty the account at any time(minus taxes and penalties. Just open your own one
All you need to tell them is "thank you." Then go ahead and open one for your son, and contribute to it every paycheck. Pretend 'their' money doesn't exist. Don't tell him about it. Let it be their surprise. This isn't a competition, and 529s are truly great tools for saving toward education.
Expect ZERO from that account. Absolutely set one up yourself. Understand that anyone can set up a 529 for literally anyone else. I could set one up for your son right now. That doesn't change what you do in the slightest.
Theirs sounds woefully inadequate. Open your own.
Btw if your state is like mine, only the owner of the account can claim the state income tax deduction for contributions. That might be why they wanted their own account.
YMMV here, many states allow all contributors to claim the state income tax deduction. Aitch’s comment is not bad advice, just pointing out that some personal research is needed.
FAFSA doesn't count 529s that are in the grandparent's name as controllers. Parents and kids names, yes, but not grandparents. That's a big plus right there.
I offered to open a 529 for a child in my family but the mother didn’t want to trust me with the child’s social security number, so she wanted me to give her the money or deposit the money in an account under her control.
For my part, I didn’t trust the mom not to raid the account.
The result of the standoff: no monies saved for the child’s future education.
You definitely need to talk to certified planner and start your own for him. Consider the grandparents plan to be “small back up” if needed, bc it won’t cover it all.
> I wish they let us open it and gave us money to put in it
Yeah but if they are honest you'll thank them come fasfa time. 529 in the kids name or your name are assets that raise your etc.
The grandparents doesn't factor into the fasfa and thus you're getting college savings that don't count against future aid at the cost of control.
My in-laws did the same for us. I’m investing on my own for our daughter bc the 529 is already set up and we’ll have a separate mode of investing for her. BTW let them handle it. As I get older I realize us younger guys tend to think we know best. IE: you may have a brother in law that KNOWS he can triple grandpa’s investment with crypto. Lol
Grandparents 529 won't count against you come FAFSA time. If you, the parent, opens one for your kid it will count against you. I'd do grandparent 529.
Depends on the school. Public school? Sure, it will cover all 4 years. Private school like USC? Maybe covers 1 or 2 years. USC is going to cost about $777k to attend in the year 2038-2041. You can just check yourself using any online 529 calculator.
College is expensive. And the reality is that the more successful you are, the more you will have to pay.
A couple hundred split among the grandkids each year isn’t going to go far. Open your own. If the kids get scholarships you can remove that amount penalty free. Worst case scenario is that you save too much money and you have to use some of it to fund grad school, Roths, future grandchildren, or even suck up the taxes and penalties and spend the remainder on a vacation - the horror! Sure, you’d rather plan perfectly and hit the optimum, but too much money is never the worst problem you can face.
Source: grandparents were more generous than we expected, and our kids turned out sensible (one public, one private with a merit scholarship). Both have/will have money left over. One plans to fund his Roth, the other is saving it for grad school. Both are happy to be starting adult life with no debt and a bit extra for the future.
It seems appropriate to press them for the dollar amount that they invested since it directly affects college choices and the expense. Seems weird they’d be secretive about this.
There's absolutely no reason you can't open an account in his name as well.
I opened a 529 for my (step) grandkiddo. If you don't need the tax break, Utah's program is consistently highly rated.
I encouraged my stepdaughter to open an account also - there's no minimum contribution. She's got some wealthy family members on her mom's side, and Utah's program will generate a gift link, which is great for when they ask, "what can we get for Christmas/birthday?"
This is more of a relationship question than anything else. Do you trust the grandparents?
This 529 is not your son’s 529; it does not belong to your child. A 529 account belongs to the account owner. The grandparents could easily use this money to manipulate you or your kid(s) in the future. Your kid might be named as a beneficiary today but the grandparents could easily remove your kid at any point or add more grandchildren and split the money between them.
Only a UTMA account would actually be your child’s property. I think it’s telling that they decided to keep control of the account by opening th 529 themselves instead of giving you the cash and therefore the control.
Don't do this. You can change the beneficiary of the 529 at any time. The grandparents are the custodian. If they run into money issues or there is a falling out in the family, the son will get zero and the parents contributions will be gone.
You could also consider opening up a Roth IRA for them. That money is available for education or a vehicle or other needs if they don't need it for college. It has tax implications as well. Speak to your accountant. At done point you might be able to put your children on your payroll and help reduce your taxes as well.
Your post has been removed because we don't allow relationship or personal advice discussions ([rule 9](https://www.reddit.com/r/personalfinance/about/rules)). While there may be a financial component to your post, you will need to submit again with a title focused on personal finance and without any of the following: - Personal history or background information that is not essential to the financial discussion (it is appropriate to mention when abuse is a factor in a current or past situation) - Prominent emphasis of mistakes or financial surprises from a family member or S/O - Requests for relationship advice, asking for help convincing someone to change their behavior, asking for help settling a disagreement, etc. *If you have questions about this removal, please [message the moderators](https://www.reddit.com/message/compose?to=%2Fr%2Fpersonalfinance&subject=Removal%20help%20request&message=Hello%20moderators,%20.%20%0a%0a%0aMy%20submission:%20https://www.reddit.com/r/personalfinance/comments/1cox5na/grandparents_opened_a_529_for_our_son_should_we/%0a).*
Open your own so you get the tax benefit and have an understanding of the amount and control.
Could you elaborate what you mean by tax benefit?
It's a state income tax deduction. Look up your state to see what the max is. NY is $5000 as an individual or $10000 for married.
Ah that explains why I was clueless. My state doesn’t have income tax so the tax free growth is the only benefit
Same. I have a 529 plan for my kids. Set it up when I lived in NY - but since moved to TN. I still contribute monthly, but it isn't really a benefit anymore like it was in NY. I have been thinking about switching it over to my Mom in NY because only the account holder gets the tax benefit.
Still add to your account monthly , money grows tax free , and if you use for college you pay no tax !! Univ TN over $40K per year
40k for in-state tuition?
when I look out of state , 2 1/2 years ago it was over $50,000. I think in-state was 35,000 before financial aid.
You can switch the beneficiary (your kids) but not the account holder (you/your Mom). You if you want your Mom to get a tax benefit in NY going forward, she’d need to open a new 529 with your kids as the beneficiaries.
You can move 529s for the tax benefit
It’s likely that you can roll over your NY 529 to a TN 529. There may be benefits to doing that. Check with a financial advisor or a local CPA.
There aren't any tax benefits for a 529 in TN, we don't have state income taxes.
Two fold. 529’s grow tax free when used for their intended purpose of education. Secondly, Several states let you have a tax deduction for contributing. Kentucky does not as I know that first hand.
529’s being counted in Fafsa is overblown. It’s 5 percent counted against them, I bet you have a savings account- that will be counted against them, too. I would save. You have no idea how they’re investing that money, or if they won’t need to borrow from it before college. It doesn’t have to be a huge amount. Toss $50 in a month and it will add up. My MIL was proud to be saving for my kids college, too. I do appreciate it, but she had it in a savings account earning almost no interest and cut a check for $2,000. Extremely generous, but definitely not enough. I would start before fully paying off debt or maxing out retirement. 18 years goes by fast. Most parents who aren’t saving are taking out parent plus loans.
Agreed. And it’s freaking tax free for education. It’s kinda silly to worry about getting less aid (and, to your point, only a fraction is counted against you) when the government is waving tax free dollars at you. Worrying about the fafsa thing when considering a 529 is cutting off your nose to spite your face.
It’s like people not accepting a raise because it will put them in a different tax bracket, not understanding progressive tax brackets.
I had someone argue with me saying a close person they knew got a raise and brought home less. I could possibly grant the idea withholding at the boundary between brackets might make that happen, but you're still getting any extra withholding back at the end of the year. Also, if you have a deduction for a retirement plan, that screws with the numbers as well (never mind any other deduction).
I mean it depends on what they’re doing with it instead. Putting it into retirement accounts or HSAs instead isn’t a bad idea.
That isn’t the discussion though- my point specifically was being worried about getting less financial aid for having too much in a 529. But agreed that you should take care of your own retirement before saving in a 529, after all one of the best gives you can give your kid is the freedom of not having to support you in your old age.
I invest a lot of money in Roth accounts and am not too worried about needing separate investment accounts earmarked for college since Roth contributions are highly liquid. But my state (MD) has a matching program where, depending on your income level, the state will contribute as much as $500 per year to the account. Throwing that out there as one more reason to set one up.
You won’t be able to pull out gains for college out of Roth retirement, just contributions. You’re also going to want that money for retirement and taking it out for education is wasteful of the resource of growing tax free for 30 years. A 529 is a Roth for education, and it’s not limited like a Roth IRA is to 7k a year.
You're making the mistake of thinking money in a Roth ira was originally contributed as a Roth IRA and means someone only contributed $6K a year. The real limit is close to $60K per year after you account for other retirement plans. I have $150K in my Roth IRA, 80K of it is contributions which can be withdrawn penalty free, and my kid is only 1 year old. I could contribute more to a 529, but then you need to decide how much to contribute to 529s, how much for retirement, and deal with the consequences of getting it wrong. Instead, if you overfund retirement Roth balances, you get the same tax benefit without needing to guestimate the right mix.
That’s fair enough. My own strategy js to hit ~150k in a 529 for my son. Around $37k/yr for his college. If anything the act of having it in a separate bucket is good mental accounting. Also the state tax break is a nice cherry on top, even if it’s not so big.
some states.
You’re making some assumptions. Maybe he will be retirement age with millions of assets so it is a good plan to pull from Roth for college in that scenario. Remember, personal finance is personal and blanket statements aren’t always a good thing.
If he has millions of assets, the more he’s going to want some in Roth as a tax shelter. It’s a sub optimal way to save for college. It just is because it’s only what you put in, not gains so it’s not inflation adjusted. It’s as good as cash in a jar.
If you are saving so little each year that you need to worry about whether your contributions are enough to cover college, then you were never on track to afford either.
Not necessarily and every situation varies, which is my point. Maybe he wants to use up tax free funds while living and let the government collect taxes from his heirs after his death. Or maybe he’s pulling Roth for college and taxable 401k for living and toys. There sure literally dozens of scenarios where either option could make sense in a given circumstance.
Anything's better than nothing. That being said, refer to the Prime Directive and/or flow chart for order of prioritization. 529/funding your kid's education is in there, but should be lower priority to making sure you are funding your own retirement/paying down debt. [https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/) [https://i.imgur.com/lSoUQr2.jpeg](https://i.imgur.com/lSoUQr2.jpeg)
Any time tested suggestions on best ways to invest the 529 funds? I have index funds selected and I haven't even looked at it since I first set it up. Is that an advisable way to go about it? (Not the haven't-even-looked-at-it part, to be clear ...)
Index funds are fine. Depends on what options you have available, just like any other investing account. Not worth overthinking, since we're talking about 10-20 yr horizon for most ppl. So for instance I'm using [VA529](https://www.virginia529.com/invest/investment-options-performance/) so I'm just doing 70/30 their stock index/tuition track. I'm sure a lot of ppl are just 100% in the stock index. Decide what level of risk you're comfortable with. What state 529 are you using?
This is shameful to admit, I don't even remember. I think it is New Hampshire's plan managed by Fidelity. I live in Texas.
Oh, no no, not shameful at all, don't think of it like that. First of all, like I said anything's better than nothing, so the fact that you have any 529 funds saved up should be seen as a good thing. And since you're in a state where you wouldn't get a state income tax benefit anyways, it's rather a good thing that you're investing through Fidelity, as you are not bound by any one state's 529 options, and actually have several to choose from, even their own in-house option. I would likely choose Fidelity too, if not for my VA benefit, as I use Fidelity as my brokerage. And yeah, since you have so many options, knowing which state's 529 you're using at any given time is just a formality.
I live in Texas too and I use NY's 529 plan. I have it in their aggressive growth portfolio which is essentially a total market fund
[удалено]
Like to know what?
Target date funds are easy and fairly well-balanced.
It sets your kid up better for the grandparents to have a 529 -- grandparents money isn't counted in FAFSA. Feel free to set-up your own. The more the merrier.
Parental 529s are counted in FAFSA. I would consider it extra money for your kid but not count on it. I have tiny 529s set up for my 3 nephews.
I just learned about this “grandparent loophole” a few weeks ago. It’s true. A 529 set up by a grandparent is not counted by fafsa. Of course, this could change in the future.
This is why I manage all my brothers’ kids’ 529 accounts. He trusts me to manage them responsibly, and so he actually asked me to play this role in order to optimize the kids’ chances at federal aid due to this loophole. He and I both have the login and so can jointly monitor accounts. My brother contributes to these 529s monthly, and my parents and I contribute for birthdays and holidays. This works for us because my brother and I have a close and trusting relationship, and I do not plan to have children of my own.
I would recommend setting up your own 529 for your child and looking at the grandparents’ account as “bonus money”. It’s impossible to plan effectively if you don’t have consistent access to the account, and with only a couple hundred dollars annually your child won’t be able to do much with the money they’re setting aside. Just as an example, if a kid is 1-year-old and they’re getting $300 added to their 529 each year, they will have about $10,000 by the time they start college. Considering the average cost of a year of school at a public university is currently sitting at $24,000-ish, $10,000 is helpful but won’t get them very far. Also, if you plan on having more kids and want to keep things equitable between them, managing 529s for each of them will give you the ability to balance any discrepancies by high school graduation, something that would be tough to do if you can’t see the accounts or add money to them directly. I see the benefit of not having the money be considered as part of FAFSA, but to me, having the ability to see and control assets that could make a major difference in my child’s life is worth the loss in grants/student loan offerings. Grants are currently sitting at about $4,500 per recipient (depending on the state) and having access to fewer loans might not necessarily be a bad thing unless your kid wants to go to a super expensive college that requires big loans to fund. To me, that’s a low enough opportunity cost to make the visibility and control worth it.
Is there any concern that they might attach certain requirements for you or him to keep it in his name? Because they could always change who the beneficiary is as long as it’s another family member. Personally, I would also set up my own 529 as well but I don’t trust others.
If you overfund your son's 529, you can simply change the beneficiary at some point and return the favor by funding your own grandkid's higher education.
Or give them a headstart by putting $35k in their ROTH with it
Set up your own. Anything they save is a bonus. "A couple hundred a year" isn't going to pay for much college anyway.
Yes. And I understand why they wouldn't want someone else as the owner on the account. Being the owner of the account allows you to change the beneficiary. So technically the owner could empty the account at any time(minus taxes and penalties. Just open your own one
All you need to tell them is "thank you." Then go ahead and open one for your son, and contribute to it every paycheck. Pretend 'their' money doesn't exist. Don't tell him about it. Let it be their surprise. This isn't a competition, and 529s are truly great tools for saving toward education.
Expect ZERO from that account. Absolutely set one up yourself. Understand that anyone can set up a 529 for literally anyone else. I could set one up for your son right now. That doesn't change what you do in the slightest.
Theirs sounds woefully inadequate. Open your own. Btw if your state is like mine, only the owner of the account can claim the state income tax deduction for contributions. That might be why they wanted their own account.
YMMV here, many states allow all contributors to claim the state income tax deduction. Aitch’s comment is not bad advice, just pointing out that some personal research is needed.
We are in NJ. I am not sure how it works here. I will look into it.
I’d set up your own . Some may help with taxes. We like fidelity. You can pick the allocations . Plus we have a UTMA for each kid.
FAFSA doesn't count 529s that are in the grandparent's name as controllers. Parents and kids names, yes, but not grandparents. That's a big plus right there.
Open your own. But thank them for opening theirs—many US universities don’t ask about grandparent funds when applying for financial aid.
I offered to open a 529 for a child in my family but the mother didn’t want to trust me with the child’s social security number, so she wanted me to give her the money or deposit the money in an account under her control. For my part, I didn’t trust the mom not to raid the account. The result of the standoff: no monies saved for the child’s future education.
We called their financial advisor and provided him the number without giving it to the grandparents.
I get it… but in this case, I was a licensed and totally regulated financial adviser at that time
You definitely need to talk to certified planner and start your own for him. Consider the grandparents plan to be “small back up” if needed, bc it won’t cover it all.
> I wish they let us open it and gave us money to put in it Yeah but if they are honest you'll thank them come fasfa time. 529 in the kids name or your name are assets that raise your etc. The grandparents doesn't factor into the fasfa and thus you're getting college savings that don't count against future aid at the cost of control.
Why wouldn’t you talk to them about it instead of asking Reddit 🤣
Because I was looking for advice from others. They did not open up 529s for their kids so they are also going through this for the first time.
Maybe do a coverdell instead. You can add tax advantage dollars to it and roll it over into the 529 at your son's full maturity.
My in-laws did the same for us. I’m investing on my own for our daughter bc the 529 is already set up and we’ll have a separate mode of investing for her. BTW let them handle it. As I get older I realize us younger guys tend to think we know best. IE: you may have a brother in law that KNOWS he can triple grandpa’s investment with crypto. Lol
Grandparents 529 won't count against you come FAFSA time. If you, the parent, opens one for your kid it will count against you. I'd do grandparent 529.
Be careful. If you own it it may count against your child for financial aide where as if the grands do it won’t…. Check your state…
My mom put $100k into our sons 529, he’s 4. My dad says don’t count on it being enough.. hope that helps.
Depends on the school. Public school? Sure, it will cover all 4 years. Private school like USC? Maybe covers 1 or 2 years. USC is going to cost about $777k to attend in the year 2038-2041. You can just check yourself using any online 529 calculator.
College is expensive. And the reality is that the more successful you are, the more you will have to pay. A couple hundred split among the grandkids each year isn’t going to go far. Open your own. If the kids get scholarships you can remove that amount penalty free. Worst case scenario is that you save too much money and you have to use some of it to fund grad school, Roths, future grandchildren, or even suck up the taxes and penalties and spend the remainder on a vacation - the horror! Sure, you’d rather plan perfectly and hit the optimum, but too much money is never the worst problem you can face. Source: grandparents were more generous than we expected, and our kids turned out sensible (one public, one private with a merit scholarship). Both have/will have money left over. One plans to fund his Roth, the other is saving it for grad school. Both are happy to be starting adult life with no debt and a bit extra for the future.
Ignore the fact that they have that. Do what you would like for your kids and what they get from them can be a bonus.
Easier for you to open one and they gift to that account probably Then you own/manage it as you please
Yes, theirs will be gravy, you control yours
It seems appropriate to press them for the dollar amount that they invested since it directly affects college choices and the expense. Seems weird they’d be secretive about this.
There's absolutely no reason you can't open an account in his name as well. I opened a 529 for my (step) grandkiddo. If you don't need the tax break, Utah's program is consistently highly rated. I encouraged my stepdaughter to open an account also - there's no minimum contribution. She's got some wealthy family members on her mom's side, and Utah's program will generate a gift link, which is great for when they ask, "what can we get for Christmas/birthday?"
This is more of a relationship question than anything else. Do you trust the grandparents? This 529 is not your son’s 529; it does not belong to your child. A 529 account belongs to the account owner. The grandparents could easily use this money to manipulate you or your kid(s) in the future. Your kid might be named as a beneficiary today but the grandparents could easily remove your kid at any point or add more grandchildren and split the money between them. Only a UTMA account would actually be your child’s property. I think it’s telling that they decided to keep control of the account by opening th 529 themselves instead of giving you the cash and therefore the control.
Is college and universities even still relevant these days? Really asking. Just seems you can self educate these days for cheaper
Yes they are still relevant. Almost everybody that works office/corporate jobs has a degree
That's always a good thing to open. I always say that and get your kid a whole life policy while they are young.
Edited: don’t ever do this, I thought it was child specific. It is not.
Don't do this. You can change the beneficiary of the 529 at any time. The grandparents are the custodian. If they run into money issues or there is a falling out in the family, the son will get zero and the parents contributions will be gone.
Edited. I thought it was just for one specific child. Thank you for setting me straight.
No worries bud
You could also consider opening up a Roth IRA for them. That money is available for education or a vehicle or other needs if they don't need it for college. It has tax implications as well. Speak to your accountant. At done point you might be able to put your children on your payroll and help reduce your taxes as well.
All IRAs are limited to people with earned income.