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When good transactions go bad - T. Rowe Price + Vanguard
Now I'm worried. As I said above, I have 529 accounts at TRP for two grandsons. Fairly soon they'll be headed off to college. How hard might the withdrawal process be!! David
What I experienced was exasperating and not well handled, but it was the exception.
So long as transactions have been ordinary and haven't deviated one iota from the norm, I've not had problems. But once one introduces even the slightest variation, that opens the door to errors, which in the worst case as here can cascade out of control.
The variation I introduced was to invest in a closed TRP fund. If one wants to blame the victim (me), I did have a single clue that TRP wasn't fully set up to handle this.
Online, one can usually prepare an IRA transfer form into TRP funds. But not into closed funds, even if one is an eligible investor. (In contrast, eligible investors can invest in a closed fund online via an internal fund exchange.) So something weird was going on with the IRA transfers to closed funds.
I'll have to reread hank's recounting of his problems to see if there was anything "unvanilla" there or if TRP simply botched a run-of-the-mill transaction.
My point is that I would not be too concerned about how TRP handles certain 529 plan withdrawals. That's precisely what these plans are set up to do. But I might watch carefully over a less common type of transaction or one new to TRP.
For example, TRP says one cannot currently, online, initiate a payment directly to a school. It might not be wise to be first in line to try this out when it becomes available.
Why isn’t there an online process to initiate a distribution payment directly to a school?
We are always working to enhance the options available to our account holders and hope to offer this service in the future. For now, you will need to call our College Savings Specialists at 866-521-1894 or complete a Distribution form and mail it in.
We chose to have the fund sent to us (account owner) to pay for tuition and room & board, and NOT to the university. By year end, a 1098-T Form you receive will only include the tuition. What is not included are Room & board, books, and computer supplies. Depending on the university, the housing billing is separated from the tuition billing. I like to keep these qualified expenses separately for accurate tax reporting purpose.
I have done withdrawals from IL 529 sent to beneficiary - easy. States oversee 529 but the services are from the fund companies.
As there are thousands of colleges and universities, all 529s may not be ready to handle sending funds directly to institutions. But what would be the benefit of that? In fact, funds may be lost in institutional jungle.
On the other hand, people can send personal funds directly to institutions to pay bills for their kids (and others, if so inclined) and a benefit is that those funds don't count for the annual gift limits.
Comments
How hard might the withdrawal process be!!
David
So long as transactions have been ordinary and haven't deviated one iota from the norm, I've not had problems. But once one introduces even the slightest variation, that opens the door to errors, which in the worst case as here can cascade out of control.
The variation I introduced was to invest in a closed TRP fund. If one wants to blame the victim (me), I did have a single clue that TRP wasn't fully set up to handle this.
Online, one can usually prepare an IRA transfer form into TRP funds. But not into closed funds, even if one is an eligible investor. (In contrast, eligible investors can invest in a closed fund online via an internal fund exchange.) So something weird was going on with the IRA transfers to closed funds.
I'll have to reread hank's recounting of his problems to see if there was anything "unvanilla" there or if TRP simply botched a run-of-the-mill transaction.
My point is that I would not be too concerned about how TRP handles certain 529 plan withdrawals. That's precisely what these plans are set up to do. But I might watch carefully over a less common type of transaction or one new to TRP.
For example, TRP says one cannot currently, online, initiate a payment directly to a school. It might not be wise to be first in line to try this out when it becomes available. https://www.troweprice.com/personal-investing/troweprice-529/frequently-asked-questions.html
https://savingforcollege.com/article/how-to-pay-your-college-tuition-bill-with-a-529-plan
We chose to have the fund sent to us (account owner) to pay for tuition and room & board, and NOT to the university. By year end, a 1098-T Form you receive will only include the tuition. What is not included are Room & board, books, and computer supplies. Depending on the university, the housing billing is separated from the tuition billing. I like to keep these qualified expenses separately for accurate tax reporting purpose.
As there are thousands of colleges and universities, all 529s may not be ready to handle sending funds directly to institutions. But what would be the benefit of that? In fact, funds may be lost in institutional jungle.
On the other hand, people can send personal funds directly to institutions to pay bills for their kids (and others, if so inclined) and a benefit is that those funds don't count for the annual gift limits.