Any reason to change a state 529 plan?

[ZapBrannigan]

I don't typically ask pilots for financial advice for the same reason I don't ask a plumber about dentistry... But I'm breaking my own rule here because I'm curious what you folks think.

We started an Arkansas 529 plan for my son before he was born and have been contributing to that plan for the last decade or so.

Now we have moved to Texas and I'm curious whether there is any risk or benefit to changing the 529 to a Texas (or any other) plan?

Thanks in advance

 

[typhoonpilot]

It's been awhile and I had to terminate the plan, but I think I went with Kansas because their plans could be used at any school in the country. It was through Schwab.

TP

 

[ZapBrannigan]

I think Arkansas is the same but I'm not sure... I better find out

 

[cezzna]

I do the upromise credit card 529 plan. 1% goes in and I use the card for expenses. The 529 part is vanguard and have been happy with it, not tied to any state, low fees.

 

[elmetal]

tell me more about this upromise shebangle please?

 

[Cessnaflyer]

I think Arkansas is the same but I'm not sure... I better find out

I would check with the plan. It might not have to be moved at all.

Washington has a horrible GET program instead of a true 529 plan and it is under legislative review right now for it's stupidity.

With nearly all investing I love most of Vanguards options and low costs and use them for our 529 plan.

 

[ZapBrannigan]

I have UPromise and the UPromise vanguard account too... For some reason I thought it was linked to an Arkansas 529, but I access it through the Vanguard site.

 

[Cessnaflyer]

I know the one we have is linked to Nevada

 

[dustoff17]

I avoid the 529s all together and use other investment opportunities that I earmark for education funding.

 

[Cessnaflyer]

I avoid the 529s all together and use other investment opportunities that I earmark for education funding.

IIRC those can hurt the FAFSA

 

[dustoff17]

IIRC those can hurt the FAFSA

EXACTLY why I avoid them!!! Interesting how something so seemingly simple can screw you in the long run.

 

[Cessnaflyer]

EXACTLY why I avoid them!!! Interesting how something so seemingly simple can screw you in the long run.

What I meant is that your investment accounts hurt more than a 529 in your name as a custodian.

 

[dustoff17]

What I meant is that your investment accounts hurt more than a 529 in your name as a custodian.

Apologies, misunderstood your post.

6&6; my investments count as custodial in some cases but a 529 counts as asset to student in almost all cases. Play the odds.

 

[SrFnFly227]

It seems so messed up that doing the proper thing and saving for your child's education can end up screwing them when it come time to take out loans.

 

[Cessnaflyer]

It seems so messed up that doing the proper thing and saving for your child's education can end up screwing them when it come time to take out loans.

There is good and bad. You get tax free growth, but it could possibly hurt on the FAFSA depending what the rule of the hour is.

I'd rather save some money away from the taxes and have that cover most of it and the little brat can get a job and hustle like I did for the rest. I am hoping the uproar in soaring tuition and book costs will help slow the inflation of the education costs in the future. Getting pretty ridiculous that the prices are skyrocketing and the content is utter crap. Especially when there are really cheap electronic version available that have huge profit margins compared to the old books.

 

[CBurkFly]

I have been told that a Roth IRA is a good substitute for a 529 plan, and education is one of the approved reasons to pull from the Roth... Don't know many of the details just what I have been led to believe...

 

[Cessnaflyer]

I have been told that a Roth IRA is a good substitute for a 529 plan, and education is one of the approved reasons to pull from the Roth... Don't know many of the details just what I have been led to believe...

IIRC, you won't be penalized but you will have to pay tax on the money used for higher education even if it is from a Roth.

Upside tax free growth.

Downsides small contribution limit and still taxed on amount taken out.

https://www.irs.gov/Retirement-Plans/Roth-IRAs to see what I missed or was wrong on.