My kids are 11 and 15. I've neglected to save any money for college for them, but I want to start now.

Given that I am starting out this late, does the 529 college make sense at this stage? If I understand correctly, the only benefit is that I won't get taxed on whatever windfall I make from the 529 investments, correct?

Is there a better way? Or is 529 the cat's meow?

P.S. I am in California - there is additional state deduction or anything that would sweeten the deal, afaik.

  • Prepaid tuition is good if you bet tuition is rising fast than the university bets it will rise. Once you have picked a 529, then transaction costs matter, some states have much lower transaction costs than others. – MatthewMartin May 1 '15 at 20:31

For some states they give you a tax break when you make a deposit into the accounts.

The 11 year old is still 11 years away from college graduation, so the growth can be significant. The 15 year old will have most of their funds in safe investments to avoid a big drop just as the they need the money. many view the automatic adjustment in risk a benefit since if this wasn't in a "529" plan you would have tax issues when selling the investments during the shift.

  • I added a link to show the states that offer the tax break. California is not one of them. – JTP - Apologise to Monica May 1 '15 at 17:38

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.