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529 college plans

tommitchell
in Off-Topic
I have recently become a great grandparent at 81 years. i would like to set up a 529 college plan for my new born great grandson. I plan on doing it through Vanguard. I understand I have complete control of the plan and can terminate it at my discretion. I must pay 10% penalty and taxes on the appreciation of the plan if I terminate. I would just like other view points on this subject. Finally Ted I don't know what you did for a living but I greatly appreciate your contribution to this site.

Comments

  • hawkmountain
    Hi tommitchell! Congratulations on becoming a great grandparent!
    I also have 529's going at Vanguard for 3 grandchildren. I can terminate at any time and pay the penalty for not using the funds for education expenses. But then, why did I set them up in the first place? The list of approved 'substitute' beneficiaries is almost mind-boggling and would require a genealogy chart. Somebody will use the money, guaranteed.
    However, my instincts tell me that I should limit the amount placed in these accounts for the following reasons:
    1) When the cash stashed in these accounts reaches astronomical amounts, some of it by misuse of the intentions of the 529 provisions, the rules may be changed. Besides, what Congress wants to see all that untaxed money? I recall Social Security and all that baloney.
    2) The 529 may impact financial aid for the child. I need to consult a good tax lawyer for the information as to who should be the owner. However, there would be some impact.
    3) Being a believer in many baskets for all those eggs, I am looking at some alternatives. Good old taxable pay-as-you go account is one. (I guess if I had a boatload, I'd be looking at a trust...alas...)
    Good luck to you!
    best, hawk, age 73 BTW

  • TedTed
    @tommitchell: Thanks for the kind works ! I going to link some 529 plan information that might be of some use, depending on what state you lives in. Vanguard is considered by most as the gold standard of 529 plans.
    Regards,
    Ted
    P.S. I'm a retired school teacher

    M* Best 529 Plans:
    http://news.morningstar.com/articlenet/article.aspx?id=718259

    Saving For College. Com:
    http://www.savingforcollege.com/

    U.S. News & World Report Finding The Best 529 Plans:
    http://money.usnews.com/529s
  • ronorono
    Hi Tom and congratulations.

    Being a grandparent is God's reward for not killing your children.

    We have 529's here in Michigan for my two grandsons. Deal of deals.

    First of all, it's a straight tax deduction at the state level.

    You can always transfer it to the parents.

    You can transfer it between grandkids.

    You can cash it out with minimal penalties - but again, why?

    These are very flexible plans. The one knock I've heard for grandparents is for financial aid qualification it's not treated the same as if it was from a parent. That's why if financial aid is going to be involved (some 18 years from now), you can always sign it over to the parents. feh.

    Deal of deals.

    peace,

    rono
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