<p>Ds is a freshman. Plan is to contribute all this year to add enough to our current 529 account in order to pay for his senior year. We have other savings for his sophomore and jr. year. We're older parents and pretty fiscally conservative at this point in our lives. Any comments for or against?</p>
<p>Thanks.</p>
<p>Does your state provide income tax benefits for 529 contributions?</p>
<p>I was going to say the same thing as @collegeparents did. Illinois offers a 5% discount (il tax rate) up to $10k of contributions per year. I am still contributing to my daughters 529 and she is a college sophomore.</p>
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<p>That’s an excellent point. OP’s son could take some or all of the money in the rediscovered mutual fund account/former UGMA account (see OP’s other recent thread) and invest it in a 529 account for himself. If he has capital gains taxes from cashing in the mutual funds, some of that may be offset at the state level if the state provides an income tax benefit for 529 contributions. Plus, a student-owned 529 will receive favorable treatment under FAFSA as compared to other types of student assets.</p>
<p>I think that’s what I’m going to do. Take the UGMA money and payroll deductions to put in a 529. Our state does offer tax benefits. Thanks!</p>
<p>Just be aware: if you take the (former) UGMA money and put it in a 529, it will be a student-owned 529 account, and your son will have full access to it to do whatever he wants with the account funds, just as he has the full legal right to do now with the mutual fund account. If you then add to the student-owned 529 account with payroll deductions from a parent, each payroll deduction will be considered a gift from the parent to your son; you will be giving up control of the money. If your son is responsible and on board with this plan, it shouldn’t be a problem. If, on the other hand…</p>