We started saving $250/pp for each DC at birth (we also put in a lump sum to get things started). The plan has always been to get each kid to $50k (at around 5 years old) and then switch to saving that money in something that could be used for college or retirement. We also put in all gift money. At the same time, DH has been maxing his TSP, I get the match for mine, and we put money into a Roth (not the max).

Think about when you will need the college money. For us, it will be before we can access the TSP money. This is why we opted for a 529 and a savings/retirement option.

2K/month or 2K/year?

The Roth is great if there is a chance you may not need the money for college, as it gives you some flexibility if you don't need it for retirement. The gamble with the 529 is whether the chance on the 5.75% tax deduction outweighs the potential 10% penalty for taking it out if you don't use it on education.

Personally we are maxing 401k/tsp and ROTH (we are below the AGI threshold), then do the VA 529 invest (16k last year for 2 kids, both under 4). We hope to contribute around 50k/kid to the 529, expect that to grow to around 100k and cover the rest from post tax accounts, hope to not touch the Roth amounts.

Sidebar: If you are doing the VA 529 INVEST plan you get up to a 4k deduction per owner/beneficiary/fund combination. So if you have 2 parents each open accounts for 2 kids and invest in 2 funds you could deduct up to 32k/year:

Parent 1/child 1/total stock fund - 4k
Parent 1/child 1/intl stock fund - 4k
Parent 1/child 2/total stock fund - 4k
Parent 1/child 2/intl stock fund - 4k
ditto for parent 2 for a total deduction of 32k.

Google va ruling 10-240 for the letter ruling from the tax commissioner.

We are currently saving about 12% for retirement based on maxing out (tax benefit) 401ks at $17,500. The additional 12,000 will get us just over 15% annually towards retirement.

The college savings goal would be to fully fund in-state and to have some left over for graduate school. Or, if the DC so chooses, spend the entire amount on private and they can get additional FA to cover the difference and pay for their own grad school. Accordingly, we are budgeting for 35,000 annually (based on saving for college.com in state is $25,000 private is $45,000, so we are saving for $33,000). Yes, we are still low (they project savings at $845/month), but this is the best we can do now as we are currently paying for a nanny and part-time preschool for both and this will increase as they attend more days a week for the next two years. We hope to reassess our college savings goals once they are in elementary. And, based on prior annual bonuses that we have received we expect to allocate portions of our bonuses to college savings (probably $5k each annually).

Our income is beyond the IRA deduction limit. VA only provides $4,000 deduction per 529 account.

Since our expected per child contributions will be 6,000 (or 11,000 with bonus), should we fund the 529 with the full 6,000 (11,000), or is there more benefit (tax, financial, or simply the ability to have more flexibility over spending) to splitting $4,000 to 529 and $2,000 (7,000) to an IRA?

What percentage of your income is "maxing out" retirement? A good goal is 15-20%.

Would the IRA contributions be deductible? If not, and the 529 contributions are, then it may make sense to put more into the 529s.

Do you plan to save for state or private college? Do you expect the kids to pay for any of it themselves, or quality for financial aid? $500/month is only going to get part of state college paid for (unless they go in-state). Personally, my goal is $1000/month, but that is based on my values of what educational opportunities I want to give my kid.

The IRA thread mentions using an IRA for college savings made me question our approach to savings. We haven't started our college funds but will be doing so this month as we have an extra $2,000 net coming in (just paid off our own student loans).

Our plan was to allocated $500 per child (ages 2 and 4) into a 529. And $1,000 would supplement our retirement savings through a backdoor IRA and the rest would go into an investment account.

Should we lower our 529 contributions and put more into an IRA? What is the benefit? Should we fund the 529 up to the state tax benefit and shift the extra to an IRA?

I would appreciate any resources people go to for information (books, advisors, web pages, etc).

Also, 401k is $600k (maxing out) emergency fund is $35k. So this really is an additional $2k just for investment/savings. Everything else is covered.

Any help with this is appreciated.