Anonymous wrote:

Anonymous wrote:Well we have 529s, which I know is not what you asked.

BUT we were absolutely in your boat for years and didn't open the 529s until our kid was 6. And we still don't fund them as heavily as we do other investment vehicles. What pushed us to finally do it was the rule change that allows you to convert a 529 to a Roth IRA (the account must have been open for that beneficiary for 15 years and the investments must be at least 5 years old).

It's currently capped at 35k for roll over so we decided to fund them up to that amount for sure and will then reassess. We've only had them a year.

There has been discussion of a rule change that would also allow leftover 529 funds to be used for a down payment on a home. We'll be keeping an eye on that.

Theses additional uses combined with the tax benefits were enough to push us to do it, as part of a broader investment strategy. We have no intention of "fully funding" the accounts and don't view it as the primary way we will pay for college.

Then why answer? All these posts now will be about 529. Oh dcum humble brag away

Anonymous wrote:Well we have 529s, which I know is not what you asked.

BUT we were absolutely in your boat for years and didn't open the 529s until our kid was 6. And we still don't fund them as heavily as we do other investment vehicles. What pushed us to finally do it was the rule change that allows you to convert a 529 to a Roth IRA (the account must have been open for that beneficiary for 15 years and the investments must be at least 5 years old).

It's currently capped at 35k for roll over so we decided to fund them up to that amount for sure and will then reassess. We've only had them a year.

There has been discussion of a rule change that would also allow leftover 529 funds to be used for a down payment on a home. We'll be keeping an eye on that.

Theses additional uses combined with the tax benefits were enough to push us to do it, as part of a broader investment strategy. We have no intention of "fully funding" the accounts and don't view it as the primary way we will pay for college.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We were poor when kids were born. I did not want my kids college tuition in a 529 to tank if the stock market tanked, or if we were still poor, incapacitated or dead.

So, we bought the MD Prepaid College Trust for both kids for the maximum years allowed. This was guaranteed by the State Govt and money was kept aside to pay for it in the state budget. This Trust is not taking new enrollments anymore and not being offered anymore. If you had any money left in this program, you can also convert it into a Roth for your kid.

Our kids eventually went in-state, got full merit tuition scholarships, and much of the trust was not used. We also now are UMC, and to just pay from our cash flow for incidental expenses was very easy. So, now all that is over, we are in the process of converting it to Roth.

So long story short. We only bought for both kids tuition for 4 years of college each. Total cost for both kids was 80K. We spent around $60 K total for other costs (room, board, food, travel, socializing) for 4 years each. So, 2 kids, both did double majors in STEM subjects. In total it cost us 15K per year, per child - or $120K total for two kids for other college costs. We did not pay tuition.

Because they got free tuition from the college, the money invested for prepaid tuition will be converted to Roth for them. In retrospect, we saved the bare minimum ($80 K for both kids) for college and the opportunity cost of that money not being invested in stock market was not greater that the insurance factor of prepaid tuition or to hedge against increase in tuition.

To add - would we have invested in the MD Prepaid College Trust knowing what we know now? Probably yes. It was a good insurance policy for cheap. We did not know that both our kids would turn out to be such super high achieving kids in the public school system.

Wasn't there some crazy controversy over this program recently? https://marylandmatters.org/2023/04/07/lawmakers-moving-forward-with-plan-to-abolish-maryland-529-board-settle-claims-for-pre-paid-college-trust-accounts/

Anonymous wrote:Between the NY state tax break and tax-free growth, I didn't see a better option for us. I suppose if we were genius investors who had gotten into crypto 10 years ago or something, but we aren't those people.