Author Topic: Changes to 529 plans  (Read 2580 times)

stahleyp

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2547
Changes to 529 plans
« on: December 21, 2017, 05:35:09 AM »
Looks like the new tax bill is opening up 529 plans for more than just college. They're opening it up to k-12 private school too. This helps especially for folks who live in states with tax deductions for contributions.
Paul


longinvestor

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1569
  • Never interrupt compounding unnecessarily -Munger
Re: Changes to 529 plans
« Reply #1 on: December 21, 2017, 07:58:52 AM »
http://www.savingforcollege.com/articles/gop-bill-would-eliminate-coverdell-esas-and-make-529s-more-flexible

This is nothing but f&$*&g lobbying by the FI's at its worst.

Coverdell should have been expanded. The poor choices of funds and the loaded fees of 529 plans is the reason I did not put much into it until just before the money was needed for my kids. In coverdell, I could invest as I pleased. Only bummer was the $2000 annual limit. That was ridiculously low given tuition costs. Now they just kill it off! Swell.


Cigarbutt

  • Hero Member
  • *****
  • Posts: 941
Re: Changes to 529 plans
« Reply #2 on: December 21, 2017, 08:41:29 AM »
Have often wondered why college savings accounts are not popular overall.
In the US, statistics say that only 6% of families with young children use these accounts.
The lack of flexibility is certainly a factor.
For some reason, many people (high income and low income) prefer to use the student loan programs/forgiveness option.
To save or borrow? The answer seems to be easy these days.

Anyways.
In Canada, there is a similar program. There are some features that constrain flexibility but, if you navigate well, the advantages can be very real.
My understanding is that most families who use this program do not need it...
Increasing layers of complexity can do that.
Would encourage anyone having young children to look into this as compounding is your friend.

maybe4less

  • Full Member
  • ***
  • Posts: 124
Re: Changes to 529 plans
« Reply #3 on: December 21, 2017, 09:31:01 AM »
http://www.savingforcollege.com/articles/gop-bill-would-eliminate-coverdell-esas-and-make-529s-more-flexible

This is nothing but f&$*&g lobbying by the FI's at its worst.

Coverdell should have been expanded. The poor choices of funds and the loaded fees of 529 plans is the reason I did not put much into it until just before the money was needed for my kids. In coverdell, I could invest as I pleased. Only bummer was the $2000 annual limit. That was ridiculously low given tuition costs. Now they just kill it off! Swell.

Are you sure the Coverdell repeal made it into the final bill? I can't find anything from the last week on Coverdells.

stahleyp

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2547
Re: Changes to 529 plans
« Reply #4 on: December 21, 2017, 02:23:06 PM »
Different states have pretty low fees on their plans. Many times you can switch (but not always) after you make a contribution to a different state with lower fees. In some cases you can make a contribution to a different state plan and still get the deduction.
Paul

GregS

  • Full Member
  • ***
  • Posts: 166
Re: Changes to 529 plans
« Reply #5 on: December 21, 2017, 03:31:58 PM »
I'm trying to understand how to take advantage of the 529s for K-12.  Unless you live in a state that gets a tax deduction for contributions (I don't), or unless you can "endow" private school by contributing a lump sum early and drawing down, this doesn't seem that useful.  If someone knows how to take advantage of this as a "pay as you go" private school parent, I'd love to hear it.

mhdousa

  • Lifetime Member
  • Full Member
  • *****
  • Posts: 249
Re: Changes to 529 plans
« Reply #6 on: December 21, 2017, 06:01:47 PM »
I'm trying to understand how to take advantage of the 529s for K-12.  Unless you live in a state that gets a tax deduction for contributions (I don't), or unless you can "endow" private school by contributing a lump sum early and drawing down, this doesn't seem that useful.  If someone knows how to take advantage of this as a "pay as you go" private school parent, I'd love to hear it.

Yeah, I've been wondering this as well. As someone with small kids, I've been contributing to a 529 for the last few years. One of them is in kindergarten now, the other will be in a few years. With a bull market during this time, I could pay for part of their private grade school with today's appreciated 529 funds with the expectation that the next 5 years gains won't be as good as the last.

But I don't know that this is generalizable good thing.

mwtorock

  • Jr. Member
  • **
  • Posts: 70
Re: Changes to 529 plans
« Reply #7 on: December 21, 2017, 06:24:30 PM »
once you have a new born, start putting max amount into 529. investment horizon 6 yrs if going private for K, or 15 yrs if going private for high school only. depends the stock market condition and time horizon, you can mix equity with fixed income for investment. Every year, you just need to withdraw tuition. It makes more economic sense to keep it in 529 longer to get the benefit of tax shield for capital gain and dividend.

sleepydragon

  • Hero Member
  • *****
  • Posts: 515
Re: Changes to 529 plans
« Reply #8 on: December 21, 2017, 07:28:10 PM »
Do you guys think it's better to send kids to private schools or public schools? If private schools, is it better to do it starting from elementary or later? The private school cost so much more and I don't know anyone around me who are successful from private schools (many from public schools).

GregS

  • Full Member
  • ***
  • Posts: 166
Re: Changes to 529 plans
« Reply #9 on: December 22, 2017, 01:56:55 PM »
once you have a new born, start putting max amount into 529. investment horizon 6 yrs if going private for K, or 15 yrs if going private for high school only. depends the stock market condition and time horizon, you can mix equity with fixed income for investment. Every year, you just need to withdraw tuition. It makes more economic sense to keep it in 529 longer to get the benefit of tax shield for capital gain and dividend.

Yeah, that's the only way I see it working, saving before they start school or doing a lump sum.  For someone like me who already has his kids in school, there's no real advantage to it.