check out the definitions/use of $/terms in the VA 529 College America plan - very generous and cars, electronics, etc. are all eligible.

The major plus of the 529s for us is that the growth is tax free. For us that dramatically increases the return. We were getting killed on our regular vanguard funds just with the gains from churn in the funds. We still have small non 529 Vanguard funds for the kids and there was enough churn in those the last couple of years to require filing income taxes for both kids. Combined with the earnings of one kid we ended up having to pay taxes on their funds earnings. The 529 avoids all that.

Not going to college was not an option for our kids so I didn't worry so much about that.

If you use a 529 account and use the money for college, then you won't be taxed on the gains in the account (and you might get a state tax break).

On the other hand, if you use a 529 account and don't use the money for college (and you don't fall in an exception, like a scholarship), you will owe tax on your earnings at ordinary income rates (not capital gains) and you will also owe a 10% penalty on your earnings.

Obviously it's up to you which way to go, but I wouldn't put more in a 529 than you expect to use.

There may be other ways you can save that will reduce taxes, such as a Roth IRA, or buying mutual funds/ETFs, will at least make you eligible for capital gains treatment.

Yeah, look at the fine print in the tax code. You can spend 529 money on anything you want, even throw it in the river, but anything outside of "qualified" educational expenses has tax ramifications. Understand those before you make a decision.

I'm looking at the various 529 accounts offered and if I had to make a decision I would probably choose a Vanguard 529. But I don't like that it's limited to just education expenses. I'd like to be able to use the money for non-education expenses if my kids decide not to go to college (though the Asian mom in me says, NO YOU'RE GOING TO COLLEGE!)

Has anyone just put the "college fund" in an investment account and managed the account on their own? I'm no Wall Street whiz, but I've been getting decent returns on the funds I've been buying through Vanguard. I *think* I could manage the "college fund" the same way, but of course I'm nervous about it. Any tips?