Anonymous wrote:Most people end up going to college especially if it's going to be paid for.

No dear. Most people don't. just maybe most people you know. While higher than it used to be, 4 year degrees are still achieved by under 30% of people 25+

http://quickfacts.census.gov/qfd/states/00000.html

Most people end up going to college especially if it's going to be paid for.

Anonymous wrote:When I took out money from my Roth for my down payment (first time homebuyer) I still paid 10% penalty for early withdrawal. Same thing happened to a friend. I would read the fine print on early withdrawals for educational expenses unless you will be 59 1/2 by then.

Personally, I have zero desire to use tax free retirement earnings for college.

If you paid a penalty, it was on earnings only. You never pay a penalty to withdraw roth IRA contributions, any amount, any reason.

I wish americans were more informed about finances. The scary thing is, DCUM is among the most educated subset.

Anonymous wrote:

Anonymous wrote:This is why a roth ira is a much better idea if you're elligible.

Not really. There's a cap on roth. For those that already contribute up to max for retirement, this is not a good alternative for 529.

Read OP's post. She says she doesn't have much extra.

OP, sounds like a Roth IRA could be a good option in your case.

When I took out money from my Roth for my down payment (first time homebuyer) I still paid 10% penalty for early withdrawal. Same thing happened to a friend. I would read the fine print on early withdrawals for educational expenses unless you will be 59 1/2 by then.

Personally, I have zero desire to use tax free retirement earnings for college.

Anonymous wrote:This is why a roth ira is a much better idea if you're elligible.

Not really. There's a cap on roth. For those that already contribute up to max for retirement, this is not a good alternative for 529.

Anonymous wrote:We have an only child who is 5 (with about $45,00+ in it). I'm pretty sure she will go to college. Both her parents did.

How does that guarantee anything?

We have an only child who is 5 (with about $45,00+ in it). I'm pretty sure she will go to college. Both her parents did.

I'm in the same boat with an only child. DH has a chunk of money in a 529 and wants to put enough in it for DS to go to school loan free. It makes me nervous. You just never know what your child will decide to do although we're saving with good intentions. I would hate to lose any of that money through a penalty.

Anonymous wrote:The difference between 529 and Roth IRA is that 529 can get tax deduction. If you live in Virginia, even you are not qualify for federal, you still can get Virginia state tax deduction up to $4000 per student per year.

The VA deduction is actually $4000/account per year - a student can have multiple accounts and you can take the deduction on each.

The difference between 529 and Roth IRA is that 529 can get tax deduction. If you live in Virginia, even you are not qualify for federal, you still can get Virginia state tax deduction up to $4000 per student per year.

This is why a roth ira is a much better idea if you're elligible.

I have a 5 year old who is an only child and am trying to decide if I should set up a 529 plan for her. I generally get why they are so popular but am wondering what parents of only children do. I've been reading up on this and wanted to check if I am understanding correctly how this would work.

If she goes to a traditional college or an accredited specialized program such as culinary school, the 529 funds can be used.

If she doesn't do any post secondary education, my options would be

1. Withdraw funds for my own use, paying taxes on investment gain and 10% penalty, or
2. Change beneficiary to a family member with no tax consequences (however, her cousins are older so this may not help us)

Background: I am a single parent and I have my own retirement and emergency savings in good shape. After all that there is not a ton of money left over each month but there is some and I could probably find ways to cut expenses and make more available. My job is secure and I'm in my 40s.

Does this sound right? Is there anything I'm missing? What would you do in my situation?