Just depleted the last of the 529 plans...

[Anonymous]

Did you have to pay taxes on market gains?

[Anonymous]

Anonymous wrote:Did you have to pay taxes on market gains?

No

[Anonymous]

Anonymous wrote:

Anonymous wrote:Did you have to pay taxes on market gains?

No

+1. That is the entire reason a 529 is a good investment tool.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much return are folks getting in their 529s?

Feel like ours barely grows. We switched the equity distribution a year ago, as it seemed to switch to bonds waaaaay too quickly.

Still just about 4-5% now.

Only 40k for our 4th grader so far. We started late but are putting in $600 a month. Anticipate only having 2-3 years of state school saved at this rate.

Don't use a "my kid is Age 5 and you pick how to invest for me" fund. Pick 100% growth funds until your kid is 14/15, then start to move it to less riskier investments with 25% cutback each year as you get closer to needing the $.

DO that and you will average the SP500/market which is a lot more than 4-5%. I can get 4-5% with CDs/MM accounts currently.

Yes, but like other "average joe's" who don't spend time lurking in finance forums, we learned this the hard way and several years too late.

Didn't need to "lurk in a finance forum". A simple google for the last 20 years would inform you that you can self select your funds and that is the better approach. And that you want to keep it aggressively invested until a few years before college starts.
Same with 401K---you can be aggressive still when you are 40, because you have 20-25+ years before you will need that money.

I'm another participant in VA529 Invest. While we initially invested in VA529 Prepaid for our children, the majority of our funds are now in VA529 Invest, which has more than doubled our contributions. Our investment strategy remains quite aggressive, with 70% allocated to domestic investments and 30% to international ones. No bonds.

Of our three children, one is currently a high school junior, and we're hopeful they'll gain admission to a top Virginia public university. However, if they opt for an out-of-state or private institution, we might consider easing back on our aggressive investments. Nonetheless, we view the 529 Invest portion as earmarked specifically for graduate school expenses. If they all get into VA public schools, then the prepaid will have been a decent investment, but if they do something else, we would have made a lot more just putting that same amount into the 529 Invest for 18 years. 

[Anonymous]

Anonymous wrote:Yep my TSP and 529s are 100% equities! I won't switch to bonds until very late in the game if at all depending on how things are.

That's what I did but stupidly wasn't paying attention to rebalancing towards bonds when the kids hit HS. A big market dip right before we had to start cashing in DS's 529 was an unpleasant surprise. Still had enough and DS, with one year left at VT, will have a little left over but not as much for use towards grad school than we'd hoped.

FWIW...
We didn't really start putting $ in 529s until the kids were in ES.

By end of 7th grade, DS's was about $40k. By HS graduation, $115k. Now that we know next year's tuition, I can see that after 4 years at Virginia Tech, he'll have about $11k left over. We pay tuition, fees, off-campus rent, initial set up of a commuter meal plan from the 529. He pays for food beyond that + other expenses. Has an on-campus job as a TA.

DD's 529 had a bit longer to grow and was $125k when she graduated HS. Her school (private w/ merit) cost us about $27k/yr for the 1st year. Cost will go up about $3k next year. Assuming that pace continues, we should come in just about right with the 529 balance, excluding any additional costs for things like study abroad which we can cash flow.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP this is great information. We are trying to figure out when to stop funding. When did you stop funding the 529s?

Kid 1: 14
529 Balance: $128K
Monthly Contribution: $500

Kid 2: 12
529 Balance: $110K
Monthly Contribution: $500

As of now we are assuming both kids will attend in state (VA) public schools.

OP here…I stopped funding when I had 3 years covered for each. I wanted to try and not overfund. For example, Virginia Tech in 2023 said the cost of living off campus is something like $7K. The reality for us was the actual cost is 12K (1K per 12 mos). That 5K delta is not eligible for 529 reimbursement. Whether that is audited I don’t know but I played by the rules and only used $7K for the off campus housing.

Overfunding is not necessarily bad, the money could be used for your next child, grad school or you could have it skip a generation. And now you can move some amount into Roth. But I looked at it from an opportunity cost perspective and the money could be used elsewhere.

Look at the VA public’s Cost of Attendance (COA). Each school has one. It will give you a good idea of what you should expect. Of course, schools do raise their fees so you have to be aware of that though a few lock-in a rate for four years.

Same. We'd been on track to save to cover 4-years in-state, figuring we could cash flow if they went someplace more expensive. Then my parents gifted $25k per kid into their 529s. So we redirected our savings to our regular investment accounts so we could use that to help them in other ways. Both ended up at in-state or similar cost schools and the grandparent gift covered roughly one year.

[Anonymous]

I started out in another's state's 529 plan on in age-based fund, then I did some research and found Utah, so I opened a new account with Utah and invested in 100% in a low cost index fund (UTVTX).

DC has $231k in the Utah 529:
- $150,340.50 principal
- $80,744.15 earnings

I kept the other 529 plan that I used the first two years. It hasn't even kept up with the market after all the fees.

[Anonymous]

Not sure how folks are getting minimal returns. We started VA529 plans for both kids 13 years ago. Overall...

Principal: $140K
Value: $235K
Gains: $95K

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is really helpful. We have about $90k in 529s for each of our kids so far and they are in 1st and 4th grade. Seems we are in good shape for in-state, which has always been my goal (to have in-state fully funded).

I get nervous when people tell me that yearly costs will be $80k-100k.

Not for in-state or OOS/Privates that give merit. Once you give up the notion that your kid must attend a T50 school, you will realize that there are tons of great options, and many will give merit (if not FA eligible). You just need to search a tier or two below what's a "reach/target" for your kid. Currently, a good student (not great, but just good, think 3.5UW+ HS gpa and 1250Sat) can find schools that cost only $30Kper year if that is all you can pay.

+1
We did not have a lot saved in a 529 per DCUM standards. Looking back, starting in 2018, we paid between $4,200 and $5,300 in costs (tuition and fees) to an OOS state school each semester out of the 529. OOS tuition in 2019 was ~$5,800/semester. The university reduced the tuition by ~$7,500 a year based on an SAT score in the 1300s. There were of course the additional costs, housing, books, and summer tuition. Athletics provided a bit of an additional discount that increased each year. They also covered board.

DC has a graduate assistant position now. The tuition is paid and there is a stipend for the year. We pay the fees, which is being paid out of what remains in the 529.

[Anonymous]

Anonymous wrote:Child #1 spent $110K at JMU for 9 semesters and an overseas summer program. 2021 graduation, fully launched.
Child #2 spent $120K at VT for 8 semesters. 2024 graduation upcoming( but still paying rent thru July).

That was the "all in" cost for instate. The periodic investment over time was $124K into the 529's, I withdrew $208K, market gains were $84K.

So, 2 kids in state for $230K. $208K was covered by 529 plans, cash flowed the delta.

This can’t be true. You must be lying. You need at least 500K per child for college.

[Anonymous]

Anonymous wrote:What is AOTC?!

American Opportunity Tax Credit. If you spend $4,000 out of pocket (i.e., not from a 529 or Coverdell) you can get $1,500 refunded on your tax return. This is good for four years only. Read more in Publication 970 on the IRS website.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is really helpful. We have about $90k in 529s for each of our kids so far and they are in 1st and 4th grade. Seems we are in good shape for in-state, which has always been my goal (to have in-state fully funded).

I get nervous when people tell me that yearly costs will be $80k-100k.

Not for in-state or OOS/Privates that give merit. Once you give up the notion that your kid must attend a T50 school, you will realize that there are tons of great options, and many will give merit (if not FA eligible). You just need to search a tier or two below what's a "reach/target" for your kid. Currently, a good student (not great, but just good, think 3.5UW+ HS gpa and 1250Sat) can find schools that cost only $30Kper year if that is all you can pay.

This is not reality.

Do you consider Auburn a "good not great" school? Becuase they give a ton of merit, but you must be a great student. I just went thorugh the entire cycle and my kid applied to all of these supposed OOS schools that give merit and your SAT scores need to be around 1450, which is not realistic for most kids. Auburn gives $17,000 per year if your SAT is at 1550+. Your kid has about a 2% chance of scoring that.

Even with 17K/yr from "good not great" Auburn that still will cost you 42K/yr to attend and you MUST maintain a 3.0 to keep that merit money each year.

[Anonymous]

I am new to 529 and opened one a couple months ago. My child is 9 yo.
How much should I start contributing each month so we can afford in-state college 9 years from now?
Is there a possibility of not just $0 market gains but also losing the money we invested from our pockets?
Thanks for any responses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is really helpful. We have about $90k in 529s for each of our kids so far and they are in 1st and 4th grade. Seems we are in good shape for in-state, which has always been my goal (to have in-state fully funded).

I get nervous when people tell me that yearly costs will be $80k-100k.

Not for in-state or OOS/Privates that give merit. Once you give up the notion that your kid must attend a T50 school, you will realize that there are tons of great options, and many will give merit (if not FA eligible). You just need to search a tier or two below what's a "reach/target" for your kid. Currently, a good student (not great, but just good, think 3.5UW+ HS gpa and 1250Sat) can find schools that cost only $30Kper year if that is all you can pay.

This is not reality.

Do you consider Auburn a "good not great" school? Becuase they give a ton of merit, but you must be a great student. I just went thorugh the entire cycle and my kid applied to all of these supposed OOS schools that give merit and your SAT scores need to be around 1450, which is not realistic for most kids. Auburn gives $17,000 per year if your SAT is at 1550+. Your kid has about a 2% chance of scoring that.

Even with 17K/yr from "good not great" Auburn that still will cost you 42K/yr to attend and you MUST maintain a 3.0 to keep that merit money each year.

NP here. Just randomly looked up U of Alabama and a 3.5+ and 1300 is 10K off tuition. A 3.5 and a 1360 is 24K off tuition annually. Add on DCTAG, if applicable, and you're looking at paying 14-24K annually for OOS for tuition/room and board.

[Anonymous]

No 529 plan for us.

Child 1 - received full tuition, fees, books, costs scholarship in UVA, we paid for housing for 2 years, RA and scholarship covered room and board for last two years. Total expense $20,000 in 4 years.
Child 2 - VT, small merit based scholarship ($12k/per year), paid from the rental property (fully paid, brings approximately $45,000 per year gross).

Instead of the empty 529 account on the day of graduation, like OP, my kids are now left with a real estate that is fully paid and available for them.