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If you sit down and try to do the math, you will find out that you don't need to worry about targets. Just save, save, save as much as you can.Great vehicle for saving, go for it.I have seen good sites comparing the State's plans, someone will have a link for sure. Find one with a good track record and then look into tax benefits. I get a break in Michigan income tax but only if I invest in the Michigan plan...each state will be a little different.
Depends on your state. Check out savingforcollege.com
MI doesn't have a max contribution, but there are limits on what State income tax break you can get annually. I do think that is $5k/year.Each plan and state is different...you have to research that website a little bit.
I'm in the Wisconsin plan and have $50 automatically deducted from our checking account each month and put into each child's 529 plan. I'm not sure what the minimums are but it's something below $50 per month.
1) I invest in them2) Massachusetts3) $1k per month4) Target is $350k but we very likely won't make that with $1k a monthRule of thumb: You should be saving 20% of your gross pay towards retirement before starting to save for college. It does look like you are likely close to that number though from the rough data you provided.
Plus you pay tax on any gains from the plan as well. However if you have two children and one doesn't go to college you can roll that money into the college bound child's plan without any tax ramifications.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
The plan that I use has no minimum. Whenever I have some extra $, I mail in a check. Sometimes is is $200, other times it is $50.
Also, I think that the tax-free status on the earnings no longers qualifies so you probably would have to pay taxes on the amount you took out not for school.Personally, I can't imagine my kids not going, just because everyone in my immediate family has gone to college. But, if on the off chance they didn't, I wouldn't be worried about the 10% or the taxes. You would have to pay the taxes in any normal investment vehicle (although you probably get the higher income taxes, not capital gains) as well. I would take the 10% risk just because a) you are investing in stocks, better long term returns than CDs and b) you get tax benefits on your purchases and you get Roth type tax-free growth. If you kid does go to college, you would probably get a much better return than CDs, especially since you would pay taxes on your CD interest as well. A quick math example, and I would bet that over 10+ years, you would make out better with a 529 even if you got hit with the 10% penalty.And, if any of my kids don't go to college, then their 529s are still in my name, so just found money for me or for them as long as I am OK with their decision.
one note that may or may not help your situation. These 529 plans can be transfered to other family members (siblings, cousins, nephews, nieces etc), so there are ways top get around the penalty by simply trading with another family member.They give you $6k and you transfer the 529 plan into their name. They then use the plan with no penalty and you get back the 6k you saved.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
if my daughter gets some sort of scholarship for college, I am so buying a boat and naming it 529 PLAN.If my daughter instead wants to start up a business instead of college, I will simply pay the penalty and taxes and then give her the rest for the business.And, if any of my kids don't go to college, then their 529s are still in my name, so just found money for me or for them as long as I am OK with their decision.
) I'd almost want to go that route with my daughter and use the money I am saving for her expenses. (Any government types please look past this next point)
We only have 1 kid and I am "fixed" so no plans for more.one note that may or may not help your situation. These 529 plans can be transfered to other family members (siblings, cousins, nephews, nieces etc), so there are ways top get around the penalty by simply trading with another family member.They give you $6k and you transfer the 529 plan into their name. They then use the plan with no penalty and you get back the 6k you saved.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
you could also roll it over to a grandchild, when/if the time comesWe only have 1 kid and I am "fixed" so no plans for more.one note that may or may not help your situation. These 529 plans can be transfered to other family members (siblings, cousins, nephews, nieces etc), so there are ways top get around the penalty by simply trading with another family member.They give you $6k and you transfer the 529 plan into their name. They then use the plan with no penalty and you get back the 6k you saved.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
it doesn't have to be a brother or a sister. It can range to the broader family (cousins, Aunts, Uncles, nieces, nephews, grand children etc)We only have 1 kid and I am "fixed" so no plans for more.one note that may or may not help your situation. These 529 plans can be transfered to other family members (siblings, cousins, nephews, nieces etc), so there are ways top get around the penalty by simply trading with another family member.They give you $6k and you transfer the 529 plan into their name. They then use the plan with no penalty and you get back the 6k you saved.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
I do the Iowa 529 plan (don't live in the state though). I started one about 5 or 6 years ago for my son. Started with $50, and put $100/month in there. He's currently up to about $11,000 and I still have 10 years to go. Just opened 2 more for my daughters. Here's the website: 529 PLAN
Agree witih my man here.
I've got one for both of my sons and started when they were 6 months old. Time is your greatest ally, so start yesterday if you can. I use Oregon's plan so I can deduct the max (2 grand) off my state income taxes. It's a bit of a perk and just about offsets whatever fees I might be saving using another state. I have no target at all, just happy to have started so early and know that anything put aside today is worth much more in 15 years or so. Compounding is your friend. Plus, they are so damn easy to set up and monitor. Big fan of the 529.
I probably would have stuck around to see where he was going with his seminar. My bet is that he was next going to show you how putting aside just 2 thousand or so today for an infant would grow to some enormous figure by 2019 and that by taking advantage of the 529 as early as you can was the best course for offsetting the rate of college tuition increase...which has outpaced anything else in this country including healthcare.It is scary to think about, but I can remember my parents freaking out about private schools costing 20K and up when I was a teenager. Same schools are now 40 a year or more.
), but y'all might also consider signing up with Upromise.com. You can attach your Upromise account to your 529, and increase your deposits that way. Sure, it might only be pennies if you're like me and just get the occasional grocery item, but if you also shop online, etc, the savings can add up. You can also have gramma and grampa join in and have their accounts attached to your 529 as well. Heck, I found someone's grocery club card in the parking lot a few years ago (from a store I've never heard of), put it on my account, and I occasionally get a few pennies. 
I did the same thing. After researching the available state plans (I live in IL), I concluded that differences were minor in the grand scheme of things. Specifically, the tax break for following the IL plan was really trivial. I want with T Rowe Price because I already have an acct with them and they made it really easy.
Doing $150/qtr and move addl. funds when I have them.
Thats exactly what I am saving per month ($1k) and I don't think I will be able to make the goal of paying for a 4 year average private education.I think in the past people always looked at having one major loan in their life and that was a mortgage loan. I think slowly as we move forward, the sentiments will change and most people will have two major loans to deal with, mortgage and college.turleyfan said:
That's quite a bit to put away each month for college. Nice work.
I only have one child (and will remain that way) so its easier to do. It is a bit depressing seeing that $1k a month seems like a lot and yet even that amount likely won't grow to cover an average 4 year private school should schools continue to grow at their historical pace over the past 20 years.
More on this hijack -- I recall reading something about how, at some point, a child would be better off financially by having the college tuition invested for them, rather than actually going to college. I don't recall the exact hypothetical, but it was something along the lines of this:If you have 2 children, 18 yrs. old. The first goes to college at a cost of 100K/yr., then graduates with a salary of $?? (I don't remember what it was). The second has $100K/yr. invested for him for 4 years, and assumed interest on that money was ??%/annum, and that second child then immediately started working for a non-college grad wage. The scenario went on to show that even though the first child earned a higher salary after graduating from college, the second child was better off financially given the time value of his $400K savings account combined with his non-college grad salary.turleyfan said:
I live in NC now and I need to move my plans over here for the kids and noticed on their web site that in addition to the income tax deduction, you can also link Upromise directly to your plan. I set up a Upromise account a while ago, but never did anything with it because the fees to open up a 529 that they worked with were way too much. Not huge, but I have $200+ in Upromise and I barely even tried and probably haven't checked it in a couple years. I will definitely go back in and update everything especially since I can link it to a 529 I want to have instead of their "partner" plans. Free money is free money.RoarinSonoran said:Not currently doing the 529 thang (yeah, I know I probably should, but working for a college = free tuition, plus my wife works in Financial Aid
Welcome. I was glad to see they still liked my Alaska plan. Evidently a new Maryland plan has slightly lower fees. Important thing is the underlying funds are good.I have a Premium membership, so if you see a plan you like and can't get access PM me. I'll copy you over what is over there.
Small price to pay.Using CDs will get you next to no where over time, and cause you to actually LOSE pace against inflation.529 plan will allow you to save in appropriate investments with more potential for return, and with a 9 year old you have plenty of time to accept the risk of market fluctuations.Question on 529's.I will do all I can to get my daughter to go to college.. But some kids just never go so.. I have almost $6,000 already set aside for her( she will be 9 this December) that I continue to roll-over in CD's. I've thought about looking into the 529 but have been concerned about what the penalty would be if it is withdrawn for anything other than college?*EDIT.. never mind I found it:Federal law imposes a 10% penalty on earnings for non-qualified distributions.
If you ever find out the answer to the bolded part, send me a PM. That's pretty damn creative!
Your second point is also very thought provoking and I would probably agree that the money invested earlier and not used towards tuition would almost certainly give the second child a leg up fiancially. My only reservation, and I hope this doesn't come across the wrong way, is that perhaps armed with a higher education, the college bound kid would have a greater propensity to do more with his/her money later in life....
I signed up for Upromise but Upromise does not include my 529 plan in Wisconsin. What are my options?A. Continue with upromise and bug the wisconsin plan to join?B. Open a Upromise 529 in addition to the wisconsin 529?C. Open a 529 plan that participates with upromise?For options B and C, would I then be able to roll it over into the wisconsin plan at some point or would it all depend on where the kid goes to school?Not currently doing the 529 thang (yeah, I know I probably should, but working for a college = free tuition, plus my wife works in Financial Aid), but y'all might also consider signing up with Upromise.com. You can attach your Upromise account to your 529, and increase your deposits that way. Sure, it might only be pennies if you're like me and just get the occasional grocery item, but if you also shop online, etc, the savings can add up. You can also have gramma and grampa join in and have their accounts attached to your 529 as well. Heck, I found someone's grocery club card in the parking lot a few years ago (from a store I've never heard of), put it on my account, and I occasionally get a few pennies.
That restrict you to certain schools?
