32 votes
Accepted

What does "not funded by you" mean in Vanguard's college savings planner?

One of the items on the left hand side is "% of cost you plan to cover" which you've set to 50%. So you're expecting that half the cost will be covered by someone else. That's the "...
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  • 20.4k
27 votes
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Can I open a 529 retroactively to pay my student loans?

529 Contributions are not tax advantaged at the federal level, just the earnings. If you put $1000 in your 529 account, then immediately use it to pay your loan, you don't get any benefit. If you put $...
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  • 4,293
23 votes
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Can I use the new tax law to help with private school?

I think you are misunderstanding how a 529 plan works. Contributions to a 529 plan are not tax deductible on your federal return. The money you put in there is after tax. The tax advantage comes as ...
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23 votes
Accepted

Can I start 529 plans for my niece & nephew without my sibling knowing?

That's a really nice thing that you're planning to do for your niece and nephew, and it is possible to do! You do need to provide a social security number for the beneficiary of the 529 plan, so to ...
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  • 5,280
22 votes

Can I start 529 plans for my niece & nephew without my sibling knowing?

Many states have 529 plans that allow you to name yourself as the beneficiary, and you can later change the beneficiary to a qualified family member without tax implications. Regardless of state, ...
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  • 64.6k
20 votes

529 (college saving) account for multiple kids

With that close an age gap it would probably make sense to use separate 529s. Technically you can transfer funds and even change the beneficiary from one sibling to another, but if both are in college ...
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  • 116k
11 votes

Can I start 529 plans for my niece & nephew without my sibling knowing?

I'll stipulate that this is possible. I will however suggest that it is not a good idea, for a few reasons. First and foremost, saving for college is a serious thing and it has a major impact on the ...
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  • 35k
11 votes

529 vs IRA for kids education and future scholarship

First off, we should clarify what you mean by "529 - money in the kid's name". Usually, this means that the parent sets up a 529 account in their name, but puts down their kid as the beneficiary. ...
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  • 8,018
10 votes
Accepted

How do Roth IRAs compare to Traditional IRAs for college savings?

Can I not use a Traditional IRA for college savings as well? Not without tax and early withdrawal penalties. Roths can be used for education to avoid the 10% withdrawal penalty, but since the money ...
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  • 116k
9 votes
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529 (college saving) account for multiple kids

In my opinion, this is probably a personal choice. With no extra paperwork, you and your spouse can each gift $15000 per child. Unless you are planning to gift more than $30K combined, one acct, to ...
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7 votes
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529 plan withdrawal penalties

Your friend would have only been liable for a tax penalty if he withdrew more 529 money than he reported for qualified expenses. That said, if he took the distribution in his name, it triggers a ...
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  • 1,408
7 votes
Accepted

How can I roll-over a 401(k) to a different person?

As far as I know (and I have looked into this due to my own IRA woes) the only ways to transfer ownership of a 401(k) are: cash it out and pay any applicable tax and penalties; to the named ...
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7 votes

529 (college saving) account for multiple kids

Separate accounts may be better if you live in a state where 529 contributions are deductible from your state income taxes. OP did not list a state, but you may need separate accounts to claim the ...
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6 votes
Accepted

Use a 529 plan to escape taxes of investment property sale

First, can I even roll any my profits into a 529 plan to avoid taxes. No. 529 plans are not pre-tax (except for State taxes in certain States, where 529 contributions are deductible. Ohio is such a ...
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  • 131k
6 votes
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Dividends reinvested in a 401k or Coverdell ESA show up on 1099-DIV?

If this is a tax-deferred account you shouldn't be getting 1099 at all unless you withdrew something from it. Call the company and ask them why they sent it to you.
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  • 131k
6 votes
Accepted

Will it be possible to have 529 plan & use it for myself while doing the Grad Program?

Yes, you can use a 529 plan for grad school. And yes you can use it for your education. But make sure the school you want to attend is an eligible institution, check with the US Department of ...
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6 votes
Accepted

Can I deposit money into a 529 and withdraw for expenses in the same year?

Contributions to a 529 plan are not deductible at the federal level, the tax advantage is that earnings in a 529 are not taxed if used for qualified education expenses. So, there would be no point in ...
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  • 64.6k
6 votes
Accepted

Is room and board a qualified expense?

The IRS page you linked is under "Credits&Deductions" -- it applies to AOTC and LLC, and they indeed do not include room&board. 529 plans, formally Qualified Tuition Programs, are ...
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5 votes
Accepted

What is a good strategy for an over-funded 529 account?

First off, leaving money in a 529 account is not that bad, since you may always change the beneficiary to most any blood relative. So if you have leftovers, you don't HAVE to pay the 10% penalty if ...
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  • 331
5 votes
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Is it possible to use a 529 plan solely for myself, without any educational expenses?

Nice idea, but you will have a potential problem. State lawmakers have already considered this option: I looked at this site: Saving for college because it include info for on all the plans. For ...
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5 votes

Educational Savings Program vs. Individual Investment Plan

Michigan's 529 plan offers a wide variety of investment options, ranging from a very conservative guaranteed investment option (currently earning 1.75% interest) to a variety of index-based funds, ...
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5 votes

How do Roth IRAs compare to Traditional IRAs for college savings?

Both a Roth IRA and a 529 plan allow you to invest money that you do not have to pay taxes on upon withdrawal -- the money the investment makes can be used tax-free. Traditional IRAs function in the ...
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  • 5,077
5 votes

Does 529 help with no intention to attend college?

In your 529 example, you account for the 10% penalty, but not the tax on withdrawal. The gains, $190,290 are taxed, at ordinary (not cap gain) rate. Since that's on top of your income, I'd assume 22%, ...
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5 votes
Accepted

What is a good vehicle to do ad-hoc savings for kids' college?

Like most US states Maryland has two different 529 options. The prepaid college trust The College investment plan Instead I would like to sock away money on an ad-hoc basis as I can afford it. The ...
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5 votes

529 college saving plan only affect state tax return but not federal tax return, correct?

There is no federal tax break for contributions into a 529 plan. The only tax break on contributions is on the state level. Note that not all states offer a tax break, nor do they all have the same ...
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4 votes

Does it make sense for me to start a 529 college plan for my kids

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 ...
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4 votes

Will it be possible to have 529 plan & use it for myself while doing the Grad Program?

Yes, you can use a 529 plan on yourself if you are using it for qualified educational expenses, such as tuition.
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  • 10.2k
4 votes

Uniform Gift to Minors Act - Which parent has tax implications?

With a UTMA/UGMA account, the minor (child) is the legal owner of the account. Any income/proceeds from the account belong to the minor and at tax time the income goes on the minor’s tax return.* ...
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4 votes

529 (college saving) account for multiple kids

Are there different people that would be interested in contributing for different kids? This is generally only an issue if your first kid is from a prior marriage/ relationship. If there is a group ...
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  • 20.4k
4 votes

529 vs IRA for kids education and future scholarship

There are long articles, and full books that address this topic. In general, the answer is yes. Money available is treated according to how it's owned. And your retirement accounts don't count ...
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