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post #9676 of 11161
If California allowed us to use pre-tax earnings to fund a 529 plan (which I've heard is a near-term possibility) it would be enough of a swing to cause me to start funding. Right now my plan is to just fund college for my 2 kids out of earnings or taxable investments/savings. I have heard different things about whether 529s are a good idea depending on how wealthy you are but since I don't know how wealthy we will be when my oldest (hopefully) starts college we are sitting on the sidelines. We are also fully funding backdoor roths every year and can use the principal tax-free for educational expenses if we need help defraying the expenses. I definitely do vacillate on this though and may end up funding a 529 at some point.
post #9677 of 11161
Quote:
Originally Posted by lawyerdad View Post


Yeah, my non-expert conclusion is that if your plan is to set aside enough money over time to fully fund the tot's education, the choice of vehicle loses some of its significance (since the extent to which assets count for financial aid eligibility becomes irrelevant). And not that you don't get this, but opening a 529 vs. earmarking some money in your own retirement accounts for college isn't a primary choice. My own view is that there's some benefit to spreading eggs among baskets (depending on one's particular circumstances, of course) to create some flexibility to adjust to changed circumstances, changed tax laws/rates, whatever.

 

I like the spreading approach that you note here.  I wouldn't want to get to the point where I forget 18 years down the road which money was specifically set up for college vs. my retirement.  

 

The 2 biggest uncertainties I see over the next 18 years would be changing tax laws (more tax) and a shift in how higher education is viewed and costs could come down or alternatives are available.

 

The worst part about the TN529 plan is the 0.35% expense ratio but that is low enough for me not to care really.

post #9678 of 11161
Quote:
Originally Posted by jbarwick View Post

I like the spreading approach that you note here.  I wouldn't want to get to the point where I forget 18 years down the road which money was specifically set up for college vs. my retirement.  

The 2 biggest uncertainties I see over the next 18 years would be changing tax laws (more tax) and a shift in how higher education is viewed and costs could come down or alternatives are available.

The worst part about the TN529 plan is the 0.35% expense ratio but that is low enough for me not to care really.

Pretty much my view as well. I have a chunk of "start early and forget about it" money for my kid's education slow-cooking in a 529 crock pot. It's a decent amount, although certainly less than a full four years of tuition at one of the pricier schools, much less room & board and such. I don't plan to add more, because all things equal I'd rather err on the low side with that vehicle, given that I hope/expect to have other sources to draw from as well. But I like the idea that it does give me some flexibility in terms of what vehicles I draw from, and when.

Plus, while I'd not ascribe much dollars-and-cents value to this, psychologically I do think there's some value (depending on how one is intellectually and emotionally organized, of course) to it being a hard-wired "college" account and not a general retirement planning account.

Although I obviously hadn't thought about this on the front end, that last point ended up being helpful when I got divorced. The fact that it was sitting in a 529 plan with my daughter's name attached to it (similarly to two much smaller accounts I opened for my nieces) enabled me to guilt my ex into agreeing to set it aside in the general divvying of assets. Had it been in a Roth or some other sort of IRA, she would not have looked at it the same way. And even if that's not a scenario you envision for yourself, there could be other "estate planning"-type considerations. I believe (although that's not based on any exhaustive or recent research, so obviously don't take my word for it) that a 529 plan may be treated like trusts and such for purposes of probate, bankruptcy, judgment enforcement, etc. In other words, were the parents to encounter some unanticipated financial disruption putting their assets at risk, having college money in a vehicle that treats it as the child's money held in trust rather than the parents' money can help keep greedy outsiders' sticky fingers off those funds. I'm going to emphasize again, though, that I don't actually know off the top of my head that that's true of a 529 plan the way it would be for an UGTA or similar irrevocable trust. Plus there are tax and similar considerations one would need to take into account.
post #9679 of 11161
Of course if you declare bankruptcy when your kid is near college age... That might line you up for dat sweet sweet financial aid.

If you have a bunch of money in a protected vehicle, the college will want it. Those are dollars you could have been stuffing into g-strings during your rapid fall into insolvency!
post #9680 of 11161
Quote:
Originally Posted by otc View Post

Of course if you declare bankruptcy when your kid is near college age... That might line you up for dat sweet sweet financial aid.

If you have a bunch of money in a protected vehicle, the college will want it. Those are dollars you could have been stuffing into g-strings during your rapid fall into insolvency!
Sadly I have no musical talent, so I may as well put those dollahs in the college fund.
post #9681 of 11161
When I think of a 529 and consider other options like a UTMA or UGMA, the latter seem more attractive because of the flexibility one can do with the money. Education is important but who knows what the road ahead will be like...it can be a double edge sword definitely because once the minor can access the money who knows what will happen.

What are you going to do with the unused money in the 529? If I recall correctly the money can only be passed between siblings.

I figure all the money saved is supposedly to help your child regardless. Perhaps different perspectives. You can leave your child a pot of money and can always cut them off an inheritance.
post #9682 of 11161
Quote:
Originally Posted by gettoasty View Post

When I think of a 529 and consider other options like a UTMA or UGMA, the latter seem more attractive because of the flexibility one can do with the money. Education is important but who knows what the road ahead will be like...it can be a double edge sword definitely because once the minor can access the money who knows what will happen.

What are you going to do with the unused money in the 529? If I recall correctly the money can only be passed between siblings.

I figure all the money saved is supposedly to help your child regardless. Perhaps different perspectives. You can leave your child a pot of money and can always cut them off an inheritance.


Unused money not passed to a sibling can be withdrawn but you pay income tax on the gain and a 10% penalty, at least now.  We would do the UTMA or UGMA if the 529 does not cover all expenses.

 

In the end, we just wanted a vehicle to help save for school outside of our investment accounts for clarity and as pointed out above, it stays with the child in the event of a divorce.  18 years is a long way down the road so if he only has to pay income tax on the unused portion, we can deal with taxes then.

post #9683 of 11161
This no longer applies to a lot of people, but because it burns up your annual gift, the 529 plan is remarkably inefficient from the point of view of estate tax.

You can pay tuition directly without any gift/estate tax consequences, which is a big savings on estate tax when you also give to a minor's trust or UTMA/UGMA account. Even better, grandparents can pay tuition directly, which saves both estate tax and generation-skipping tax, assuming they were hoping to leave something to their grandchildren.
post #9684 of 11161
Bought into some JD this morning (21.5) and will double down if it goes closer to 20.

Also bought some BIIB on the drop, at 255, little higher than I wanted (was aiming for 250) but if could go lower. Bad news on a promising drug. I'm hoping it was an overeaction and it'll bounce back some so I can get out quick with a little winnings in between.

Wish I'd bought more GLF. Had a buy order around $3 and it touched $3.01-3.02 but didn't quite hit and now it's back past $4. Would have made a few hundred if that buy order had gone through. Oh well, at least I've got some still.

AAPL and DIS both sorta moving sideways here. Really hoping they'll just either slowly or pop 5-10% so I can trim some.

NFLX seems to be sliding down... was as high as 103-104 (I'm planning to sell a lot at 110) but now hovering just under 100. I hope it at least doesn't go back down to high 80's.
post #9685 of 11161
Quote:
Originally Posted by gettoasty View Post

When I think of a 529 and consider other options like a UTMA or UGMA, the latter seem more attractive because of the flexibility one can do with the money. Education is important but who knows what the road ahead will be like...it can be a double edge sword definitely because once the minor can access the money who knows what will happen.

What are you going to do with the unused money in the 529? If I recall correctly the money can only be passed between siblings.

I figure all the money saved is supposedly to help your child regardless. Perhaps different perspectives. You can leave your child a pot of money and can always cut them off an inheritance.
That's all reasonable, and it doesn't have to be one or the other. But there are, at least potentially, tax advantages to a 529 over other trust vehicles.
If you end up not using the 529 money for paying educational expenses, you'll hit hit with taxes and a penalty (10%, I believe) on the earnings in the account (not the principal, on which you've already paid taxes*). So it's not like the money is forfeited or something.
There are also some exceptions that would allow the money to be withdraw without those extra charges.


*Although I don't know, I imagine this works differently in states where you get to deduct contributions from your state taxable income.
post #9686 of 11161
Quote:
Originally Posted by jbarwick View Post
 

Who is still in VRX?  I know some of you tried to buy down on that Hindenburg.  

 

Was my biggest holding, but the price decline has seen to that. 

 

Lots more to buy though once funds clear tomorrow. 

 

I have made over 100%+ so far on CORR at least.  I have $40 in NADL, debating if I should sell or just hold onto it for the option value at this point.

post #9687 of 11161
Took a position in RRD today, juicy 6.1% dividend.
post #9688 of 11161
Thinking about dumping Snap-On.

Been moving sideways for a while...not sure how much more upside it has. Analysts seem mixed and consensus price target is not much higher than current price.

Doubt the dividend is going to make any sort of meaningful increase.
post #9689 of 11161
Hope nobody on here had any $ backing Theranos.
post #9690 of 11161
...

Edit: a bit too much wine during the Warriors/Cavs game.
Edited by ramuman - 6/9/16 at 5:50am
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