How much to put into 529s?

[Anonymous]

DP, we have used Utah 529 for quite a while, I have changed the investment selections over the years.. but for my two kids now I have settled on 90% US Total Stock index (UTVTX) and 10% Intl Stock Index (UTVIX).

Kid 1: Total balance $209K ( 11 yo), earnings 77K
Kid 2: Total balance $223K (15 yo), earnings 86K.

For few years, we did annual max gift limits for both kids.. In our case, ~160K of tax free earnings was totally worth it for investing in 529. We have stopped contributions this year, as we don't want to overfund 529 and will be able to cashflow any expensive college for the difference. Our HHI has risen significantly over the past 3 years, and we save to the tune of $300K per year.. cash flowing the difference shouldn't be a problem, so we are concentrating on our retirement instead.

[Anonymous]

Anonymous wrote:OP: It will be about $400K, to me as the spouse. We already have 529s started in VA- Invest 529s. Balances are not large, though.

13 y.o- ~$75K
10 y.o.- ~ $30K
7 y.o.~ $20K

Have strong retirement and other savings, but this is where we need to fill in.

I really like this calculator: https://www.savingforcollege.com/calculators/college-savings-calculator

Assuming you want them to go in-state, you need to contribute enough to get the 13 year old's account to $85k, the 10 y/o to $75k, and the 7 y/o to $60k. Put the rest ($305k) into a brokerage and you will have flexibility to help with OOS or private, if that comes up down the line.

[Anonymous]

Anonymous wrote:Is the $400k your whole inheritance or is that just the intended (inherited) 529 funds?

If you’re inheriting $400k, I’d be concerned by front loading 529s, you’re effectively gifting your inheritance to your kids. In the event of a divorce, that money is gone to you. Why not just keep the bulk in your separate name? If you don’t commingle the funds, you can always use it for college but it’s yours otherwise if you divorce.

You can always take the money out, though you have to pay a fee -- the account owner isn't the kid, the kid is the beneficiary.

FWIW, I (male) commingled an inheritance of about this size about 10 years ago, rather than keeping it separate, since I figured I hadn't done anything more to earn it than my wife had, and so if later wind up divorcing, there was no reason it should all go to me. If you aren't currently thinking that divorce seems likely, I would not expend any effort trying to figure out how best to cordon this money off in case of divorce, especially if it means potentially paying 15 percent (or more) capital gains taxes on assets you plan to sell to pay for college.

[Anonymous]

Anonymous wrote:Is the $400k your whole inheritance or is that just the intended (inherited) 529 funds?

If you’re inheriting $400k, I’d be concerned by front loading 529s, you’re effectively gifting your inheritance to your kids. In the event of a divorce, that money is gone to you. Why not just keep the bulk in your separate name? If you don’t commingle the funds, you can always use it for college but it’s yours otherwise if you divorce.

This seems bizarre to me. I would never treat an inheritance like this as though it’s not mine and my husband’s jointly. And it would still be going to the kids’ college fund anyway. What difference does it make? It’s eye opening that some people treat family finances this way, so glad my DH and I don’t.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Zero. Horrible investment choices, high fees, bad customer service, and lots of rules.
High growth stocks, some funds because one kid is 13 and pay as needed.

What are you talking about? IN VA American funds whose fees are not bad and performance is great.

Np- what?! My Virginia invest does horribly. I’m shocked at how little it’s risen. Versus my mutual funds or even my ally savings account that gets 5%. I actually lost money a couple of years ago too. It’s just atrocious. My 3 year old only has a few hundred in interest with 4 years of money put in.

Not sure what you are talking about. We started investing for our 2 kids (now 13 & 14) when they were born. Invested across 4 different accounts for each kid on a monthly basis.

Total return on investment so far is 64%. It sure isn't 0%

[Anonymous]

Anonymous wrote:DP, we have used Utah 529 for quite a while, I have changed the investment selections over the years.. but for my two kids now I have settled on 90% US Total Stock index (UTVTX) and 10% Intl Stock Index (UTVIX).

Kid 1: Total balance $209K ( 11 yo), earnings 77K
Kid 2: Total balance $223K (15 yo), earnings 86K.

For few years, we did annual max gift limits for both kids.. In our case, ~160K of tax free earnings was totally worth it for investing in 529. We have stopped contributions this year, as we don't want to overfund 529 and will be able to cashflow any expensive college for the difference. Our HHI has risen significantly over the past 3 years, and we save to the tune of $300K per year.. cash flowing the difference shouldn't be a problem, so we are concentrating on our retirement instead.

I also use Utah 529 with the same mix. Oldest kid (12) is at $275k. It's likely time to stop saving, though I struggle because my school is something like $80k per year for the cost of attendance, and I plan to be retired when my kids are in college, so I don't want to leave a big gap to cash flow. My mental target is $300k per kid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Is the $400k your whole inheritance or is that just the intended (inherited) 529 funds?

If you’re inheriting $400k, I’d be concerned by front loading 529s, you’re effectively gifting your inheritance to your kids. In the event of a divorce, that money is gone to you. Why not just keep the bulk in your separate name? If you don’t commingle the funds, you can always use it for college but it’s yours otherwise if you divorce.

This seems bizarre to me. I would never treat an inheritance like this as though it’s not mine and my husband’s jointly. And it would still be going to the kids’ college fund anyway. What difference does it make? It’s eye opening that some people treat family finances this way, so glad my DH and I don’t.

Check back in if you ever have the misfortune of going through a divorce, and let us know if you still feel this way, assuming you are the person inheriting money from your parents.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP: It will be about $400K, to me as the spouse. We already have 529s started in VA- Invest 529s. Balances are not large, though.

13 y.o- ~$75K
10 y.o.- ~ $30K
7 y.o.~ $20K

Have strong retirement and other savings, but this is where we need to fill in.

I really like this calculator: https://www.savingforcollege.com/calculators/college-savings-calculator

Assuming you want them to go in-state, you need to contribute enough to get the 13 year old's account to $85k, the 10 y/o to $75k, and the 7 y/o to $60k. Put the rest ($305k) into a brokerage and you will have flexibility to help with OOS or private, if that comes up down the line.

I can see saving for a public school and not putting all of this into 529s, altho with 3 kids it might make sense to put more in on the theory one of them will use it, but that seems to be a pretty low figure.

For a 13 year old tbh I would not count on the market outperforming tuition by that much. Yes maybe we get another year of 20% returns, or maybe we get a few years of flat returns while tuition goes up 4% a year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DP, we have used Utah 529 for quite a while, I have changed the investment selections over the years.. but for my two kids now I have settled on 90% US Total Stock index (UTVTX) and 10% Intl Stock Index (UTVIX).

Kid 1: Total balance $209K ( 11 yo), earnings 77K
Kid 2: Total balance $223K (15 yo), earnings 86K.

For few years, we did annual max gift limits for both kids.. In our case, ~160K of tax free earnings was totally worth it for investing in 529. We have stopped contributions this year, as we don't want to overfund 529 and will be able to cashflow any expensive college for the difference. Our HHI has risen significantly over the past 3 years, and we save to the tune of $300K per year.. cash flowing the difference shouldn't be a problem, so we are concentrating on our retirement instead.

I also use Utah 529 with the same mix. Oldest kid (12) is at $275k. It's likely time to stop saving, though I struggle because my school is something like $80k per year for the cost of attendance, and I plan to be retired when my kids are in college, so I don't want to leave a big gap to cash flow. My mental target is $300k per kid.

Yes, 300K per kid sounds reasonable if in state schools are not an option for you. We are in Texas, and UT Austin is my older kid's first choice. He is a good student, and is likely to be in top 6% of his HS which means an auto admit to UT Austin. The only colleges he would likely consider over UT are Stanford and MIT which are really hard reaches (if not impossible). UT Austin tuition and living expenses for in state for 4 years is ~150K so we have likely overfunded the 529 at $220K (another 3-4 years of growth to go). Hence our decision to stop funding the 529 any further.

[Anonymous]

We have 400 in our 529 for a ten year old. Goal is private 4 year college and to pull out 10k year for seven years of independent school. We direct $1800 into it monthly. Education for us is our most important goal beyond retirement funding.

[Anonymous]

Anonymous wrote:We have 400 in our 529 for a ten year old. Goal is private 4 year college and to pull out 10k year for seven years of independent school. We direct $1800 into it monthly. Education for us is our most important goal beyond retirement funding.

That's quite a bit.. if you don't mind me asking, what is your retirement funding goal ?

[Anonymous]

Anonymous wrote:Zero. Horrible investment choices, high fees, bad customer service, and lots of rules.
High growth stocks, some funds because one kid is 13 and pay as needed.

+1

[Anonymous]

What are all you people with 400k for a 10 year old going to do when they go to a cheaper state school?

[Anonymous]

Anonymous wrote:What are all you people with 400k for a 10 year old going to do when they go to a cheaper state school?

I'm wondering about this, too. Aren't withdrawals from a 529 limited to the listed cost of attendance? So 400k at 10y with no further contributions and 5% yearly growth becomes $590k at 18 years old. CoA would have to be $140k per year to use up the money for a regular 4-year degree. Perhaps this is already budgeting for graduate work in a professional field or grandchildren or something.

[Anonymous]

45,000 for our 16 year old, if she stays local we won't have to get out a loan.