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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I realize I’m in the minority, but I’m not sold on a 529 to fund college, and I’m wondering if it’s really a better deal than a Roth in our situation. We have one kid so just one shot at the 529. DH and I will turn 59.5 in her third year of college, assuming she goes to college directly after high school, so could use the Roth to pay for her last years of college penalty free (and I think the first years of contributed income minus earnings before we turn 59.5). If we don’t use it, we can bank it for retirement. Why do most parents use a 529 instead of other more flexible vehicles? Are the tax benefits that much better to outweigh the lack of flexibility? What are we missing? We live in MD. Thanks.[/quote]

Most parents won't hit 59 1/2 while our kids are in college, so the Roth is not a real option. I was the same age your husband was when our respective kids were born; we still use the 529 because I want the Roth money and its attendant flexibility available for retirement.

The Roth features are so valuable for very-far-off planning, you really don't want that money going anywhere else if there is any issue of scarcity.[/quote]

Educational expenses are penalty-free withdrawals from Roths (and from 401Ks) even if you aren't 59.5 yet. The other big benefit to Roths is that they aren't considered in financial aid assessments. [/quote]

I don’t think this is correct. I understand you can withdraw money from your IRA for education, but not from a Roth 401k.[/quote]

Yes, just for Roth IRAs. Roth 401(k)s are quite different (and also subject to different limits). [/quote]

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