littleroc02us
Moderator
Cash: $ 204.95
Posts: 1013
Joined: 09 Feb 2009
|
| ESA's vs. 529ers |
 |
|
So I'm starting to think about college savings for childrens future because we are expecting in October and am studying the differences between both types of educational savings accounts. Have any of you had experiences or information that you can share regarding how to use them. We plan to only cover half of our childrens college expense based on the average in state tuition costs. We expect our children to save money before college and work during college to cover their half. I do qualify for both based on taxable joint gross income. This is what I do know:
ESA:
-As of 2010, the IRS limits your annual ESA contribution to $2,000 per student until he reaches age 18.
-Coverdell ESA may be withdrawn to pay for education expenses at an eligible elementary, secondary or post-secondary school. ESA funds may be used to pay for tuition, books, fees, room and board, tutoring, uniforms, transportation, computer equipment and special-needs services.
-ESAs offer a wider range of investment options, including stocks, bonds and CDs as well as mutual funds.
529:
-With a 529 plan, each state establishes its own lifetime contribution limits. According to Financial Aid Finder, maximum contribution limits for state 529 plans ranged from $100,000 to $365,000 in 2010.
-Funds from 529 plans may only be used to pay for tuition, fees, books, and room and board at any post-secondary institution that is eligible to participate in federal student aid programs.
-With a 529 plan, your investment choices are typically limited to a small number of mutual funds, which usually include age-based and target asset allocation options.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
|
Tue Jun 14, 2011 5:37 pm |
|
|
littleroc02us
Moderator
Cash: $ 204.95
Posts: 1013
Joined: 09 Feb 2009
|
No suggestions?
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
|
|
Wed Jun 15, 2011 7:27 pm |
|
|
oldguy
Senior Member
Cash: $ 309.10
Posts: 1480
Joined: 21 May 2006
Location: arizona
|
quote:
No suggestions?
I didn't use either of them, instead I invested the money in an account in our own name (rather than the kids). The 529 was invented in 1997 and has had only a couple updates so it may have some permanence. But earlier plans seemed to change faster than the normal 18-year "kid cycle" - limits, rules of use, and so on. So I didn't think the small tax break was worth the hassle. I used a stock fund that grew tax deferred and then paid the 15% capital gains tax as we needed the money. BTW, the amount of money is an unknown for you - one of our children got a 'full ride" scholarship, the other cost more money. Sometimes the dorm rooms are covered in scholorships, sometimes no - but as for their college cars - ol' Dad pays that.
|
|
Wed Jun 15, 2011 8:30 pm |
|
|
coaster
Senior Advisor
Cash: $ 1357.20
Posts: 6683
Joined: 11 Oct 2005
Location: Wisconsin
|
Sorry, I don't have kids so haven't paid attention to those plans. I've heard Clark Howard talk about them now and then on his radio show; you might find something on his website either in the show archives or some other article.
|
|
Thu Jun 16, 2011 6:26 am |
|
|
littleroc02us
Moderator
Cash: $ 204.95
Posts: 1013
Joined: 09 Feb 2009
|
Thanks guys, I'll do some more research....
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
|
|
Thu Jun 16, 2011 1:22 pm |
|
|
|
