Advice on college savings - market volatility (debt ceiling) and other issues

[Anonymous]

MC family of 3 here (probably "poors" by DCUM standards) with kid going to college in 3 years.

For a variety of reasons, we opened a Roth IRA for college when our kid was born rather than a 529. Most of the money is currently in an index fund, with enough to pay about 2.5 years of our in-state public flagship. Will save a little more aggressively in the next 3 years (target 50k-60k) to fully cover that cost, but am feeling anxious lately about the debt ceiling debacle and timeline for needing that money.

Should we:
1) not panic and keep the money in Roth as is - we’ve neither lost nor gained much in past 5 years or so
2) move the money to a mutual fund or something else less volatile(?)
3) move the money to our state’s 529 plan, which would also afford us other benefits: federal tax free earnings as well as tax deductible contributions up to 20k (for state taxes), no state tax on earnings or withdrawals used for college expenses
4) keep current savings in Roth and open 529 for the new savings

Three other pieces to this:
1) We have run net price calculators and are pretty comfortable with COA for a variety of colleges - from top and mid-level privates to some well-regarded public flagships. I’m not sure how money in 529 will affect need-based aid. Majority of our current savings/investments are in retirement accounts and our home which do not affect aid.
2) We will be able withdraw money from the Roth IRA penalty-free in DCs 2nd year at university, though the withdrawal would constitute income and again may affect need-based aid for those remaining years.
3) DC is "high stats" kid as they say on the college board here and we will target some schools known for giving generous merit aid; obviously can't count on this but may be one reason not to put all our eggs in the 529 basket which of course can only be used for certain educational expenses.

Thoughts?

[Anonymous]

I’ll just comment on a couple of things. In terms of starting a 529 for a kid who is 3 yrs away from college - I would not do this unless you were earmarking the money for kid’s final year of under grad or graduate school. The biggest benefit to 529s IMO is the tax free growth. But you really need time to get growth. If your time horizon for needing the funds is 5-6 yrs or more then I would do a 529. But if you’re going to need it in 3-4 yrs, there’s more of a chance you end up with little to no growth.
Re: the Roth - you can adjust the investments within the Roth without taking assets out of the Roth. Sorry if you understand that and I misread your question. As you get closer to needing the funds for tuition, make sure you’re not Uber aggressive- you don’t want a negative market cycle to coincide with needing a chunk of the funds. Get some advice on your current allocation- are you properly diversified? And how do you adjust your allocation periodically over the next three years?
Someone at the firms that holds the Roth should be able to help.

[Anonymous]

You’re worried about the debt ceiling and your Roth hasn’t grown in 5 years? Aie aie aie. Sorry for being rude, but you don’t anything about money or economics. Keep the stocks there but next time the market dips a little, add some AAPL. It’s refuge currency at this point.