Author Topic: Saving for children  (Read 1687 times)

Offline jwreels

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Saving for children
« on: September 17, 2012, 02:07:43 PM »
When I had my first child 5 years ago, I opened a 529 college savings plan.  Since then and two more kids later I have been thinking more that I don't want to invest the money in a 529 anymore.  I was thinking about opening a savings account, one for each kid, and putting the money in there.  I wasn't sure of the best place to do this. 

A few episodes back I heard Jack mention opening a Life Establishment Fund for his son.  This is a new term for me and I haven't found any information about it.  Is this a trust of some kind ?

Would it be best to just have the savings ?

Offline fred.greek

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Re: Saving for children
« Reply #1 on: September 17, 2012, 09:18:49 PM »
If you want to go the tax-deductible route, a 529 account is not, but a traditional IRA is, and one of the non-penalty withdrawal authorizations from an IRA is paying for a child college education…

Offline cohutt

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Re: Saving for children
« Reply #2 on: September 22, 2012, 05:16:47 AM »
If you want to go the tax-deductible route, a 529 account is not, but a traditional IRA is, and one of the non-penalty withdrawal authorizations from an IRA is paying for a child college education…

Perhaps but the funds withdrawn are still taxable. Why go through the exercise

Offline fred.greek

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Re: Saving for children
« Reply #3 on: September 22, 2012, 10:09:48 AM »
Yes, the funds withdrawn from a traditional IRA are taxable income in the year withdrawn.  But in the meantime, we got a tax deduction for the money that went into the IRA’s.  In a 20% tax bracket, $2,000 IRA deposits really meant only $1,600 “out of pocket”.  The 529 does not have that advantage.  I’ve never seen a 529 with anywhere near the investment options of an IRA, for example we have IRA’s that hold rental real estate.