Reply to 529 Money --Too Much?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]$5,500 per year..

I was 32 when my child was born (and when I opened the 529), and plan to retire at 65. So that gives me 33 years of needing the state tax deduction (which is the real benefit of a 529 plan).

In Virginia, you have unlimited carry-forward, but I am not going to fund a 529 after he graduates from grad school, so my assumption is I will stop funding when he is 24.

So $4,000 x 33 years is $132k. This is my maximum lifetime state tax deduction. $132k/24 years is $5500 per year.

I'll spend the 529 first, then cash flow and/or take from my Roth IRA or other, taxable investments.[/quote]

The real benefit of a 529 plan is tax deferred growth.  [b]State deduction is a rounding error.  [/b]

We have one kid.  Currently 7 but we are stuffing it full and will pass the balance to his kids if we can.  Currently have about 250K in there.

We see it as a generational tax shelter. [/quote]

Most state deductions are peanuts.  Plus, the fees charged by the 529 plans operated on behalf of states are higher than fees charged by 529 plans operated by Vanguard or Fidelity.    [/quote]

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