<p>Any opinions on apportioning withdrawals from a 529 account? Do you suggest emptying the account by paying all qualified expenses with it from the start? Or taking out a measured portion each semester?<br>
Also, do you suggest continuing to contribute while your student is in college, at least for as long as possible (e.g. until we can no longer pay as we go)?</p>
<p>I can tell you what we are doIng. We are continuing to contribute. Also, we paid the first semester from other sources, and maybe will do so for the second also. Next semester or next year I will start to use the 529, but will continue contributing too. I’d rather have as much as possible available in savings if needed rather than be stuck. If there are leftovers, they will go to grad school or younger brother.</p>
<p>I have watched the stock market since that has relevance to our 529 accounts and have tried to use money from the 529’a when the market is higher rather than lower. 
We also have continued to contribute to the 529’s annually while the kids are in college because of the tax break.</p>
<p>Some states provide a state tax benefit. If you get that it can make sense to contribute to a 529 plan even if you withdraw the same amount the same year. It is stupid and scamlike but that is how the system works. If you qualify for a tuition tax credit (does that still exist?) you don’t want to pay all of your qualified expenses with 529 withdrawals because you will end up with some taxable gains. They don’t let you double dip, ie take a tax credit and tax free 529 withdrawals to cover the same expenses.</p>
<p>I am pretty sure you should use 529 money first because of the way it counts on the fafsa.</p>
<p>That makes sense, but fafsa doesn’t apply for us, so it doesn’t really matter in our case if we withdraw early or late. Also, our state does not give a tax advantage for contributions. I am continuing to contribute because there isn’t enough in there to cover the remaining years!! As for stock market timing, in an age based portfolio, for a current student, the allocations are not so volatile.</p>
<p>LBowie: it was my understanding that you have to stop contributing to a 529 on the student’s 18th birthday. Am I wrong? Or is that specific to particular 529’s?</p>
<p>Gosh, no. I opened one for myself in my forties to pay my own tuition! (Maybe you are thinking of UGMA? Those are in the child’s name and are the child’s money.)</p>
<p>
No, tax law prohibits only the Coverdell ESA funding once the beneficiary reaches age 18.</p>
<p>Oh, my bad. We have ESA’s! Duh…</p>
<p>MJres makers a good point. In many states you can contribute to a 529 and withdraw the funds almost immediately and still get a tax deduction.</p>
<p>In PA, I think that the money has to stay in the state’s 529 Plan for two weeks and then you can withdraw it…and you can deduct up to $13,000 of contributions into the 529 Plan per taxpayer per year.</p>
<p>I think every situation is personal. Our savings plan all along included saving throughout the college years. We’re going to use the bulk of the money when we have two in college.</p>
<p>draining 529 first will lower EFC…especially important if you will have 2 or more in college at the same time.</p>
<p>One tip for 529 users–if your child receives a scholarship (not grants or loans) you can withdraw funds from your 529 equal to that scholarship in the year the scholarship was awarded without penalty. It’s a good way to tap those funds, especially if this is your last child or your child gets substantial merit aid. Put those funds into a retirement account of some kind so they don’t look like extra cash in the bank for next year’s FAFSA.</p>