So I own it but my son is the beneficiary.
I’m sure on my regular account my wife is and then my two kids are after 50/50 if we’re both gone.
I’d have to set up a separate ROth and make my son the beneficiary and put $6500 a year??
I had seen a headline on that recently. I looked it up last night and was telling my wife about it. I mean who really ever has money leftover in a 529, but we might with the new situation.
$15-20K growing over 42-50 years can really turn into a chunk of change.
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There is also a condition about how long the 529 has to have been open. I don’t remember the number of years, but it was a long time. We did not establish 529s for our kids until they were in middle or high school, before that we were just saving the money separately. I remember reading about this new law and thinking that it really wouldn’t be applicable to us because the 529s not been open long enough.
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Yes. If he’s the 529 beneficiary he’ll need a Roth IRA into which you can transfer.
Good point. I forgot to mention that. The 529 has to be in place for 15 years.
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Oh - I have to transfer it to a Roth for him.
Oh boy.
Two kids.
Then I have to do equally but I can do that - even if I move money from his to hers or change the beneficiary etc. (son, daughter).
So I own the 529 (but they are the beneficiary) and I own the Roth.
But because the kids are the beneficiary, it goes into their Roth. Got it. They don’t have one but good time to start.
I’ll read up more.
Much thanks for the tip.
I’ll have lots left - we were going to leave it for the supposed grand kids.
I saved to send them anywhere and fortunate or unfortunately based on my savings, between the two, they’ll spend maybe $150K.
I didn’t take money out last year - I have them invested aggressively and the values dropped a lot. So I lost a year of taking out money = I think I took $3500 from my daughter’s but hers is invested for a student today whereas the bigger one is invested for a kid graduating HS in 5 years even though he’s about to graduate college.
Hoping / feeling like it will come back a lot this year - but I can only take out one semester’s worth - $8K or so.
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It definitely happens quite a bit.
A more extreme example is my friend who has over $250k built up in a 529 (They wanted to be able to pay for elite private schools).
Unfortunately their daughter didn’t get in to any of those, but is in at the state flagship with a good merit scholarship so he doesn’t need more than $65k total.
But he’s not going to benefit from this new law because it’ll take decades to roll the money $6500 at a time. So he’ll just take the penalty and withdraw most of the money. He figures the return on investment will far exceed the penalty.
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And they need to actually have earnings exceeding the amount contributed. So when they are in college you may not be able to put in the full $6500 unless they have a lucrative summer job.
However one wrinkle is that you can still do the transfer if your kid exceeds the Roth income limits. So keeping money in the 529, letting it grow tax free, and transferring in 10 years when their income may otherwise be too high to make Roth contributions is a very viable strategy.
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I don’t get this. What investment options is he expecting to use that aren’t feasible within a 529? Once you don’t need the money at the age of 18 you can opt for an investment mix that has a much longer time horizon (and I expect 529 plans to highlight these more explicitly going forward).
Obviously you can’t do this for anything exceeding the $35K per person cap. Though he could split the account, make himself the beneficiary of another $35K (or more specifically an amount that will accrue to $35K over 15-20 years) and the same for his spouse and restart the clock on all of this. However, it wouldn’t surprise me if the IRS ultimately writes rules which limit these back door maneuvers.
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I don’t know about other states but the NJ 529 plan has extremely limited investment options. Not sure how/where he plans to invest. He’s financially savvy so I’m sure he has carefully evaluated his options.
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Do you retrospectively lose some tax breaks by transferring to another state’s plan? We never got tax breaks in the first place so just use Vanguard, which allows non-age adjusted investment profiles.
ChatGPT is not even close to ready for prime time when it comes to things like college application essays.
For literary criticism papers? Yeah, it can churn out a high-school- or even early-college-level essay without breaking a sweat. But for anything requiring a great deal of specificity? Nah.
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No brainer, especially for a teaching degree, low ROI
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Make sure that your friend knows that beneficiaries can withdraw any amount they received from a merit scholarship penalty-free, although do have to pay income tax on it: The truth about scholarships and 529 plans
We’re hoping our D21 will be able to use left-over 529$ to help buy a house later in life even after any grad school costs (although the new Roth conversion option is great to know about, too: thanks, CC!)
And for those posters on here deciding between merit scholarships vs. more expensive ‘better’ schools for their 23s, read my previous posts. After a very painful senior year, my D21 is now reaping the benefits of her full merit scholarship and LOVING it. The sting of attending a ‘lesser’ school quickly faded, while the bennies (and her 529 balance!) just keep accruing 
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Thank you. Did not know that.
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There has been much discussion at my house lately about taking a full ride versus being full pay elsewhere. S23 has four years full tuition, 1st year dorm, plus 4 years of stipend at Alabama. He’s also in at Purdue and Arizona with scholarships. We don’t have decisions yet for UCs, Cal States, and USC. For us it’s not as straightforward as it may seem. I do feel like we need to factor in his strong desire to stay near home, mental health, strength of the academic programs, etc…
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I totally get this. My d19 is a homebody and I couldn’t talk her into faraway schools. She’s happy being six hours away. My son is very different. He’s ruled out Bama because of the politics and I can’t argue with him in that either. He’s the one going, as much as I’d like to redo college after all this research 
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Everyone will have a different tradeoff, there is no one size fits all answer. As a parent this can be a hard decision.
My son’s best friend will be going to his ED, a top school, expensive full pay with no aid or merit. The family is no more well off than we are. They expected financial aid, but received none. Maybe they didn’t run the numbers beforehand. They will be taking out some loans. The kid is excited and it is a wonderful school, but I feel for the family. They have a younger child (as we do as well). Will this college choice limit the younger child’s choices? Will the burden of loans be a problem for the family? Maybe their financial situation will change for the better in the next few years and it will become easier. I hope it will turn out well for them! It is certainly a great school.
On the other hand in our family, we set a budget for S23 and he did not apply to any school unless they had a possibility of hitting that budget (after possible merit). So he did not even apply to the same sort of schools as his friend did. He hasn’t said anything out loud, but I worry that he compares and wonders why we are making different financial decisions than his friend’s family. Do we feel his education has a lower priority, or care less about him? Of course not…
I just keep telling myself that our kid will end up in a great place, and the budget that we set means he can go there worry-free. He will not have loans, we will not have loans, and we will be able to pay for his education even if our family financial situation changes for the worse.
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I agree those are all important and there are tradeoffs in every decision made. Each of our families/students have to figure out which tradeoffs are worth it, and which ones are deal breakers.
I also think having the money to be full pay adds another layer of complication to the tradeoff conversation. Especially if the full pay money is in play for certain schools but not others. Families with that money available have a tangible choice of how to allocate those funds, and if it makes sense to do so for the schools in play. I often think having a much lower set budget was a huge blessing in disguise.
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Yes it’s hard. Kids don’t get it. My DD says simply everyone takes loans out for college doesn’t Understand the implications of doing that for her future, not enough life experience to really comprehend. It’s hard to take a huge loan, really limits your options in the future.
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The “they will bloom where they are planted” idea is nice and probably true for many (most?) kids. But some of us have children that need a little more…tending and cultivation…than average. As several have said, you then have to weigh the decision for your family. When there are so many unknowns about what a kid’s experience will be at any school, it is tough to figure out what is a good value.
For us, we’re pondering the options. 26k for a big public school is better value on paper than 55k at a smaller private school. But if S23 gets lost in the anonymous mass, has trouble making connections, and ends up dropping out it didn’t save anything. OTOH, 55k/year is a lot more to risk when you have uncertainty, even for a school with more personalized supports and a better social fit. Also complicated when you “can” afford the higher cost, but not easily and it puts financial strain on other pieces of life.
I feel like both S23 & S24 need about 5 more years life experience and maturity to make an informed decision about what college is the best for them and how much it is reasonable to pay for it. But I guess that is often how life is; we often have to make decisions or do things we’d be better prepared for later. I’d be a much better (if much more tired) parent if I had my kids now rather than 18 years ago.
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