Open two 529s for two kids?

[Anonymous]

If you have two kids, do you have two separate 529s for each kid, one single 529, or do you have a different type of savings account in case one child does not go to college?

We have a five year old and four month old, and have a 529 for the five year old (though it barely has a few thousand in it, we are already so behind...). Figuring out what to do for the four month old. I would guess both of our kids will go to college, but in the event one doesn't, I wouldn't want their portion of the money tied up where we couldn't then use it for other needs for that child.

[Anonymous]

You can change the beneficiary on the plan any time. I have a plan for each child. We’re considered NY residents (military), so I put $5k in each account every year and deduct the $10k for state taxes.

[Anonymous]

yes. possibly 4, to maximize state benefits.

[Anonymous]

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

[Anonymous]

I understand the beneficiary can be changed, but don't have a niece or nephew who would need it. If say, child #2 doesn't go to any form of higher education or even vocational training, we end up with money saved for that child tied up that we can't access without steep penalty.

[Anonymous]

Anonymous wrote:

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

My bad, it is per account. I guess it's too late to file an amendment :/

[Anonymous]

Anonymous wrote:

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

It is per ACCOUNT HOLDER. So technically, each parent would have to open one for each kid and then you'd get 4.

[Anonymous]

Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities.

[Anonymous]

Anonymous wrote:Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities.

This is something I spend zero time worrying about. I’m assuming college plus graduate school and planning accordingly.

[Anonymous]

Anonymous wrote:Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities.

You still get the money, they just recapture the tax benefit if it’s not used for qualified educational expenses. And maybe a small penalty? I’m not sure about that. But it’s not like the money is gone. Your concerns are a bit odd, op. Just put in the amount to get the tax benefit and no extra then.

[Anonymous]

Anonymous wrote:Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities.

You can always withdraw the amount of the principal you put in without penalty. So, if you put in $50k over 18 years and your 529 gains $40k in that time, you would only pay taxes and the 10% withdrawal penalty on the accrued $40k.

It's up to you whether the tax deduction you can get on your contributions balances out that potential penalty on the gains. Really the only thing to consider is the 10% withdrawal penalty, because you'd also have to pay taxes on the gains of any regular old investment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

It is per ACCOUNT HOLDER. So technically, each parent would have to open one for each kid and then you'd get 4.

No, it is per account. Each parent can open as many accounts as they want for each kid and get up to a $4,000 deduction for each account.

DH and I each have multiple accounts per child.

[Anonymous]

Anonymous wrote:Ok but still, what if one child does not pursue any schooling beyond highschool, has a serious illness or adverse event? Do you not worry about being able to access that money for other needs if you had to? I feel like I'm playing an odds game which hopefully turns out fine, but want to be realistic about all possibilities.

The money actually belongs to you (the parent / account holder). You can withdraw it and do whatever you want with it, though there is a penalty if you don't spend it on legit educational expenses. You can transfer to another beneficiary, too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

It is per ACCOUNT HOLDER. So technically, each parent would have to open one for each kid and then you'd get 4.

No, it is per account. Each parent can open as many accounts as they want for each kid and get up to a $4,000 deduction for each account.

DH and I each have multiple accounts per child.

Doesn’t each account have to be a different type or something like that? Different investment focus or something?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:yes. possibly 4, to maximize state benefits.

in VA, it is 4,000 deduction per year per beneficiary (not per account).

It is per ACCOUNT HOLDER. So technically, each parent would have to open one for each kid and then you'd get 4.

No, it is per account. Each parent can open as many accounts as they want for each kid and get up to a $4,000 deduction for each account.

DH and I each have multiple accounts per child.

Doesn’t each account have to be a different type or something like that? Different investment focus or something?

Nope.