529 Money --Too Much?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For child's 529, we will meet the maximum investment, currently $370k with Vanguard. If child doesn't use all the funds, the funds will remain available for child's future children.

We are also using other saving vehicles for child's future expenses, but your question pertains to 529.

Thanks...this is what I was leaning towards. I think it is likely that at least one would go for advanced degrees, or so I hope. I'm not concerned about other expenses. We can handle them.

Op, if you have the ability to set aside $370k for your child's education, did you really even need to ask the question? Jeez.

We may have that much saved but only because we compromise other place (condo rather than house, no SAHM), so not a trivial effort just different priorities

Bolder was not from OP. it was from someone else. I'm OP. We have plenty of money but I can ask any questions here I want.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The other issue is that not all expenses can be paid by a 529. It is hard to predict an amount that will be too much. Yes, generational planning is okay in theory BUT this could happen, too:

You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary. Done with passing it on to educate your heirs as a trust would...

But by this point, you and your son are both dead, so you neither know nor care.

But that's not the intent so...it is something to consider. Those that are over funding thinking it WILL go towards future generations are not guaranteed of that.

Still seems hard to argue that you should care about what happens to your money two generations down the line. Especially after the kid whose college you paid for has already (a) used the money to pay for their education and (b) died himself!

[Anonymous]

Anonymous wrote:

Anonymous wrote:The other issue is that not all expenses can be paid by a 529. It is hard to predict an amount that will be too much. Yes, generational planning is okay in theory BUT this could happen, too:

You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary. Done with passing it on to educate your heirs as a trust would...

the horror...

Someone's afraid that your overfunding of a 529 might go on to educate your dead son's wife's grandchildren (who could well be your grandchildren)? Yeah, we overfund our kids' accounts and I lose zero sleep over this scenario playing out after I'm dead. Or ever.

[Anonymous]

2 kids with 280K each, plus they each have pre-paid state educations. Hope it's enough. Leftovers go the grandkids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The other issue is that not all expenses can be paid by a 529. It is hard to predict an amount that will be too much. Yes, generational planning is okay in theory BUT this could happen, too:

You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary. Done with passing it on to educate your heirs as a trust would...

the horror...

Someone's afraid that your overfunding of a 529 might go on to educate your dead son's wife's grandchildren (who could well be your grandchildren)? Yeah, we overfund our kids' accounts and I lose zero sleep over this scenario playing out after I'm dead. Or ever.

Great for you but that's not the intent we have with our money.

[Anonymous]

Anonymous wrote:2 kids with 280K each, plus they each have pre-paid state educations. Hope it's enough. Leftovers go the grandkids.

I'm not sure I believe this.

[Anonymous]

I wish I had this problem. We have 3 kids, and will be really fortunate to save $100k for each of them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The other issue is that not all expenses can be paid by a 529. It is hard to predict an amount that will be too much. Yes, generational planning is okay in theory BUT this could happen, too:

You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary. Done with passing it on to educate your heirs as a trust would...

the horror...

Someone's afraid that your overfunding of a 529 might go on to educate your dead son's wife's grandchildren (who could well be your grandchildren)? Yeah, we overfund our kids' accounts and I lose zero sleep over this scenario playing out after I'm dead. Or ever.

Great for you but that's not the intent we have with our money.

The only way you can prevent this horrible scenario is to forget 529's and trusts, and pay your kids' expenses directly. All remaining money should be spent by you, or buried with you upon your death, to prevent any outsiders from getting their grubby hands on that cash.

[Anonymous]

Anonymous wrote:2 kids with 280K each, plus they each have pre-paid state educations. Hope it's enough. Leftovers go the grandkids.

Thanks to generous grandparents, we have $300,000 in each of the fund of our 3 kids (ages 7, 12, and 14). It seems like too much.

I wonder if anyone ever just pays the 10 percent penalty if there is money left over, once college and grad school are paid for? Or do you just pass it down to future generations, which is also a great idea.

[Anonymous]

Anonymous wrote:
You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary.

The name of this child from the first marriage?

Adolf Hitler.

There. You have literally just paid for a fancy education for Adolf Hitler. Happy now?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary.

The name of this child from the first marriage?

Adolf Hitler.

There. You have literally just paid for a fancy education for Adolf Hitler. Happy now?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary.

The name of this child from the first marriage?

Adolf Hitler.

There. You have literally just paid for a fancy education for Adolf Hitler. Happy now?

She's still dead. After you've passed on your wealth to the next generation you need to cut the strings a bit. We aren't talking about millions of $ here, we are talking about some money left in a 529 account. The son and his 2 children got college educations. Seems like that's enough.

[Anonymous]

If he'd been able to stay in school things might have gone differently for all of us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:2 kids with 280K each, plus they each have pre-paid state educations. Hope it's enough. Leftovers go the grandkids.

Thanks to generous grandparents, we have $300,000 in each of the fund of our 3 kids (ages 7, 12, and 14). It seems like too much.

I wonder if anyone ever just pays the 10 percent penalty if there is money left over, once college and grad school are paid for? Or do you just pass it down to future generations, which is also a great idea.

You only pay the 10% returns over time, not for the original amount of money added in by grandparents.

(so it's bad but not so bad)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
You're the owner and your 7 year old is the beneficiary. He grows up, goes to school and uses 2/3 the money. Your intent is his kids use the remainder for school. You die and he becomes the owner and names his 2 kids as the beneficiaries. One gets a scholarship and the other uses 1/2 of the money. Your son dies and his wife becomes the owner. She names her grandchild from her first marriage as sole beneficiary.

The name of this child from the first marriage?

Adolf Hitler.

There. You have literally just paid for a fancy education for Adolf Hitler. Happy now?

She's still dead. After you've passed on your wealth to the next generation you need to cut the strings a bit. We aren't talking about millions of $ here, we are talking about some money left in a 529 account. The son and his 2 children got college educations. Seems like that's enough.

You're completely discounting the INTENT of the person who EARNED the money to begin with. This is no different from prenup planning, especially related to second marriages when one has kids already. To discount someone's intent because they will be dead is not appropriate. That's what a will, trust, prenup, etc. is for.