Anonymous wrote:

Anonymous wrote:The contributions are after-tax and the growth is taxed at ordinary income tax rates. How is this better than a normal taxable account? I guess you don't have to pay dividend tax annually, but still. Don't see why you'd do this unless you were getting free matching from somewhere.

I don’t disagree, there’s a lot of room for improvement, but to make sure I’m understanding you - you’d reject a free $1K per child because you don’t like that the free money you’re being given is taxed? Just take the initial $1K and let it grow for 18 years if nothing else…

The $1k is only for kids born in 2025-2028. Sure, the accounts are worth it for that free money for the very small number of people who qualify for it. But otherwise they are pretty worthless. No deduction on the front end, earnings taxed on the backend at ordinary rates and likely subject to kiddie tax so they will be high. Our kids weren't born in those years so we won't be opening any.

Anonymous wrote:Yeah the free money is fine. But I wouldn't put in a dollar of my own.

This. There was a piece in the Post a few months ago about how if you make contributions, you are supposed to file a gift tax form with your return that is ridiculously complicated. Other ways of saving for a kid are just as good with less paperwork.

We will be maxing it out each year and gifting the taxes owed to do a roth conversion when our kids hit their early 20s. Its basically giving them each an additional $2.5+ million in tax free retirement income.

Yeah the free money is fine. But I wouldn't put in a dollar of my own.

Anonymous wrote:The contributions are after-tax and the growth is taxed at ordinary income tax rates. How is this better than a normal taxable account? I guess you don't have to pay dividend tax annually, but still. Don't see why you'd do this unless you were getting free matching from somewhere.

I don’t disagree, there’s a lot of room for improvement, but to make sure I’m understanding you - you’d reject a free $1K per child because you don’t like that the free money you’re being given is taxed? Just take the initial $1K and let it grow for 18 years if nothing else…

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Anyone else considering adjusting how they allocate to their kid's 529s?

these accounts are nothing new and I don't know why people are excited. Open an UTMA/UGMA and at least your kids have liquidity, taxed more favorably once they are 18-21, or let it ride.

If you want a free $1k, go for it, but contributing to these versus other avenues is just buying into the brainwashing that these are life changing accounts

While we can use these accounts, they aren’t for us. They’re an attempt to incentivize people to participate in the stock market starting at a young age. This has been opt complained about in this forum how 40% of the population aren’t reaping the market gains. Here you go. Start somewhere.

+1. This wasn’t created for parents / kids already using 529s and other investment vehicles (although they also benefit). It’s to help “catch” all of the kids with parents who don’t invest, either at all or on their behalf.

The contributions are after-tax and the growth is taxed at ordinary income tax rates. How is this better than a normal taxable account? I guess you don't have to pay dividend tax annually, but still. Don't see why you'd do this unless you were getting free matching from somewhere.

Anonymous wrote:

Anonymous wrote:Anyone else considering adjusting how they allocate to their kid's 529s?

these accounts are nothing new and I don't know why people are excited. Open an UTMA/UGMA and at least your kids have liquidity, taxed more favorably once they are 18-21, or let it ride.

If you want a free $1k, go for it, but contributing to these versus other avenues is just buying into the brainwashing that these are life changing accounts

While we can use these accounts, they aren’t for us. They’re an attempt to incentivize people to participate in the stock market starting at a young age. This has been opt complained about in this forum how 40% of the population aren’t reaping the market gains. Here you go. Start somewhere.

Anonymous wrote:Anyone else considering adjusting how they allocate to their kid's 529s?

these accounts are nothing new and I don't know why people are excited. Open an UTMA/UGMA and at least your kids have liquidity, taxed more favorably once they are 18-21, or let it ride.

If you want a free $1k, go for it, but contributing to these versus other avenues is just buying into the brainwashing that these are life changing accounts

Anyone else considering adjusting how they allocate to their kid's 529s?