27

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 $1000 in an index fund and wait a year, you could end up with (say) $1050, and that extra $50 is non-taxed. Your job's $200 yearly contribution is the real ...


20

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 at the same time you would probably want to let both of them use 529 money at the same time. Also, with multiple accounts you have more flexibility over the ...


11

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. Therefore the parent is the custodian, or the "owner" of the account. However, if the student is both the beneficiary and the custodian of their own account, that ...


9

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 keep it simple, is enough. If, on the other hand, your total gifting will exceed this, the simplest approach is to use the 2 accounts, and not need to use the ...


7

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 deduction for both children. In Maryland the deduction is "per account"[1] or "per beneficiary", and each account can typically only have one beneficiary at a ...


4

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 towards that formula, but money in a child's name does. Keep in mind, your income and other assets also count towards the expected parental contribution. This is why ...


4

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 of people related to one kid and not the other, having separate plans probably makes it easier for them to contribute. How concerned are you about equality ...


3

From: https://www.mnsaves.org/documents/mn_disclosure.pdf taken on 2019-09-24 Page 2: Eligible Beneficiary Any U.S. citizen or resident alien with a valid Social Security number or taxpayer identification number. Page 5: Selecting a Beneficiary You must designate a Beneficiary on your Application (unless you are a state or local government or ...


3

From my reading of the Utah 529 Plan - My529.org I don't think you can consolidate your children's 529 into a single account. Normally each account has to have only one beneficiary (child). As qualified educational distributions will need to have the appropriate beneficiary tax id. Trying to change beneficiaries is actual paperwork submitted to the plan. ...


3

I would be surprised that there is a threat of a tax audit. I have done something similar, though not with student loan interest. Determining the last number requires a bit of spreadsheet-fu That isn't unusual for 1098-T and 1099-Q calculations. I have found that even Turbo-Tax has problems with the calculations, due to the fact that the school my ...


2

The benefit at the federal level is the ability to avoid taxes on the growth, if it is used for qualified educational purposes. If you pull money out of the account there is tax on the growth, and a 10% penalty on the growth. The federal tax would depend on the tax bracket you are in. But it will still only be a portion of the small gains you have. On the ...


2

Morrison Changs's answer is very good I would like to add a few additional points. You have 4 children 6 and under. One main benefit of many 529 plans is that they have an age based plan where the investments become more conservative. In fact the Utah age based plans let you pick from 4 different age based plans (Aggressive Global, Aggressive Domestic, ...


1

I'll mostly repeat my revised detail from the other answer thread. The 2019 version of the IRS Publication 970 seems to be fairly clear that you have to take the distribution from a Qualified Tuition Program (e.g. a 529 account) in the same year as the QHEE. I base this on the following three citations from that document, in addition to being unable to ...


1

Short answer: yes, you can use a 529 plan to pay for refinanced student loans. As long as a loan is eligible for the student loan interest deduction it is also eligible to be payed out of the 529. Long answer: Refinanced student loans (bar some exceptions) are considered "Qualified Student Loans" just like the original loans were. This is described in the ...


1

The 2019 version of the IRS Publication 970 was just recently released, and it clarifies that you have to take the distribution from a Qualified Tuition Program (e.g. a 529 account) in the same year as the qualified education expense. What is the tax benefit of a QTP? No tax is due on a distribution from a QTP unless the amount distributed is greater ...


1

I can think of two ways that the owner of the account can make a big difference. The two parents are not tax residents of the same state. Some states give a state tax deduction for the contribution, some do not. So having a specific parent make the contribution could make a difference. There are multiple marriages involved. Who has control of the funds can ...


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