Funding a 529 for Grand kids

[BarbmC]

I have been funding a 529 for my now 2 year old grandson. I have been thinking about how much college will cost in 16 years. How do you decide how much to put in?

 

[geekette]

I have been funding a 529 for my now 2 year old grandson. I have been thinking about how much college will cost in 16 years. How do you decide how much to put in?

I think that if I had the means, I would fund it to max every year (of course, I have no idea what max is, so I'm thinking 3k or something akin to IRA). It's a valid long lasting tax shelter but I don't know the rules for leftovers, or reassignment, etc. If all that is good with you, seems like a smart move with money you don't need year by year. We can't know what rule changes might come to pass any more than we know the cost of one semester in the future, but I don't think it possible to have too much in a 529.

 

[Panina]

I hope you have researched the 529 plan, if not do. If you put it in your grandchild’s name currently 20% can be used in the calculation to reduce financial aid.

 

[BarbmC]

I hope you have researched the 529 plan, if not do. If you put it in your grandchild’s name currently 20% can be used in the calculation to reduce financial aid.

I "own" the 529 plan. I had good advice when I opened it for him. That's a really good point.

 

[mdurette]

I think the answer depends on how much you wish to contribute to his college education. All or part of it??
Whatever you decide, your grandson (and his parents) are lucky to have you.

When our daughter was born, I made a goal to invest $xx into a 529 by the time she was 5. It was a number I chose and one that our financial planner agreed upon. It has done great and I still have 6 more years of up and downs before she needs it (assuming college is in her future) My thoughts now go to the idea that I may have too much in it and we have no others to allocate education funds to. I have started to talk to my financial planner about the idea of pulling some out now and reinvesting it into something non 529 related. We can do $10K a year since she is in a private school.

The moral of the reply.....don't over do it.

 

[turkel]

Any amount you give is generous and not required. You have 1 grandson now are there more to come in future years? I would be hesitant to fund to the max which is close to 350k and I would expect that all future GC would be treated the same.

Personally an account you fund annually in your name my be a better option so you can distribute as you please in years to come. I have 2 529 accounts which I own but are in each of my children ‘s names. 1 is in college the other is not going. Not sure what I will do but so far I wish I had just invested the money outside the 529.

PS My grandfather gave each child 6k for college expenses. I consider it a very generous gift.

 

[Cornell]

I have a child that is a junior in high school. I am working with a college financial planner actively with this topic. It is a VERY complex subject. Some numbers for you which may be jarring: University of Michigan will cost her $65K per year; USC $72K per year. These are not typos.

Needless to say, we are looking at all different types of options to maximize the value of the $$ I will be spending.

Interestingly, in Illinois, where I live, the FAFSA form will be required for ALL students starting in 2020 -- irregardless of financial need.

 

[TUGBrian]

had planned the 529s to be used for educational expenses OTHER than tuition....thankfully florida has a prepaid tuition program to cover that!

 

[BarbmC]

had planned the 529s to be used for educational expenses OTHER than tuition....thankfully florida has a prepaid tuition program to cover that!

It's crazy to think about the cost of education! Nice that Florida does that! My daughter and her husband are both teachers in PA, so this is something I can do to help my grandson. I can help - and I wish I could help more when you look at the cost.

 

[TUGBrian]

yes, we spent alot of time researching 529s...actually chose an out of state one that gave you more control over what funds/etc the money was invested in. I was pleasantly surprised to discover that most of the highest rated ones did not require you to be a resident of the state to setup a 529 with them. IIRC the florida 529 did not rate very high.

the prepaid program is fantastic, as you can pick what level you wish to lock the tuition rate in for when you start the program(2 year/cc up thru 4 year state college degree) thus avoiding the next 18 years of tuition increases!

also you are entitled to a full refund should your child not choose to go to college (or not choose to go to a state school)

 

[bogey21]

I opened 529s for my 3 Grandkids years ago. I started at $25 per month for each of them and gradually have increased it to $200 per month for each. Owner of the Account is my Daughter. My understanding is that if $$$ are not used for the designated kid, funds can be transferred and used for another. After typing this I think I will go to the 529 Website and increase my monthly contributions to $250 for each of them...

George