Average age to buy into DVC?

Ouch, 10% penalty plus taxes.

Only on the earnings. Paying a 10% penalty on the gain isn't as good as having stashed the money in a non tax advantaged account and not having the penalty (but paying the taxes), but its better than just having spent it.
 
Only on the earnings. Paying a 10% penalty on the gain isn't as good as having stashed the money in a non tax advantaged account and not having the penalty (but paying the taxes), but its better than just having spent it.
But invested over a period of time earnings should be most of what's in the account. Certainly anything saved would be better than what was spent looked at in this light but it still seems like a poor choice. Likely better to look to see if it can be reallocated to another family member who would take advantage of the tax free usage than to pay out 40-50% to the government.
 
We were 33 when we bought in. I don't think you can be too young or buy too soon. It's a matter of finances and if you can afford it. And honestly, my 20 year old DS could afford a small contact with the money he drops on his gaming.
 
But invested over a period of time earnings should be most of what's in the account. Certainly anything saved would be better than what was spent looked at in this light but it still seems like a poor choice. Likely better to look to see if it can be reallocated to another family member who would take advantage of the tax free usage than to pay out 40-50% to the government.

Not really likely in a 529 because its functionally an annuity - but pretty short term. And because most people can't put much aside while they still have daycare expenses, so your saving don't tend to kick in until they start kindergarten - so its only about twelve years. About 1/3 of mine is earnings.
 


Oh, also you can take it out in the name of the beneficiary with some plans - my kids are likely to have a lower tax rate than we do. They'd still pay the 10% penalty, but if they are using it to fund living after they first get out of school, they won't be paying much income tax.
 
Not really likely in a 529 because its functionally an annuity - but pretty short term. And because most people can't put much aside while they still have daycare expenses, so your saving don't tend to kick in until they start kindergarten - so its only about twelve years. About 1/3 of mine is earnings.
Still, 40-50% loss on 1/3 could be a sizable amount. Certainly better than losing it but for those where it's a known issue, why even do it to start with. 529's are all over the place but some are far more stock market/mutual fund based than others just without all the choices. More like a 401K compared to an IRA in one's control. Personally, I wouldn't do one that was a glorified savings account.
 
Oh, also you can take it out in the name of the beneficiary with some plans - my kids are likely to have a lower tax rate than we do. They'd still pay the 10% penalty, but if they are using it to fund living after they first get out of school, they won't be paying much income tax.
Thanks for the discussion on this issue, I've been working on college savings, maximizing social security, IRA's and 457 plan options the last few months.
 


Still, 40-50% loss on 1/3 could be a sizable amount. Certainly better than losing it but for those where it's a known issue, why even do it to start with. 529's are all over the place but some are far more stock market/mutual fund based than others just without all the choices. More like a 401K compared to an IRA in one's control. Personally, I wouldn't do one that was a glorified savings account.

If your kid is the beneficiary, and they don't make enough their first year out of school to pay income tax, or their rate is really low, it could be just the 10% penalty.

And, if your kids get scholarships, or they die, or you need it for special needs education for a disabled kid - those disbursements are penalty free. Plus you can transfer the money to another beneficiary - like grandkids - or possibly, in my case, my nephews.

I'm a strange person who thinks that paying too much tax because I have too much money is a really nice problem to have. I'd much rather pay 38% in taxes and another 10% in penalty on the disbursement, than have my kids pay for a student loan for 30 years. I'd rather have oversaved and have my kids be able to make their post high school choices without tuition being the biggest deciding factor, than have them end up at a school that's a poor fit because its affordable.

We have too much saved in our 529s for undergrad because my son chose tech school and my brother in law bequeathed some of his estate into our kids college funds (I hadn't planned for that, and had basically gotten done funding it) ....but my daughter is likely to go to law school or get an MBA - so, no, we aren't likely to have too much money - we'll just use it for grad school. Maybe I'll go get a Masters in History just for fun....I love school.

And if all else fails, it will still be in there when we are retired, and if we run out of money in our 401ks, our tax bracket will drop to the point where we won't lose 50%.....or it will still be there when we die and then I'm not paying the taxes at all - the estate will. If my kids are disappointed in their inheritance, I didn't raise them right.

As I said, nice problem to have. :)

(If you are thinking about 529s, do pick one where you can disburse direct to the beneficiary so you can use their tax rate. Not all have that feature.)
 
For choices, I picked an age managed fund - or one that had age managed options. I could override, but I wanted a no brainer approach to college savings. The idea was to put money in and forget about it. I'm more active in the management of my personal portfolio and my retirement accounts.
 
If your kid is the beneficiary, and they don't make enough their first year out of school to pay income tax, or their rate is really low, it could be just the 10% penalty.

And, if your kids get scholarships, or they die, or you need it for special needs education for a disabled kid - those disbursements are penalty free. Plus you can transfer the money to another beneficiary - like grandkids - or possibly, in my case, my nephews.

I'm a strange person who thinks that paying too much tax because I have too much money is a really nice problem to have. I'd much rather pay 38% in taxes and another 10% in penalty on the disbursement, than have my kids pay for a student loan for 30 years. I'd rather have oversaved and have my kids be able to make their post high school choices without tuition being the biggest deciding factor, than have them end up at a school that's a poor fit because its affordable.

We have too much saved in our 529s for undergrad because my son chose tech school and my brother in law bequeathed some of his estate into our kids college funds (I hadn't planned for that, and had basically gotten done funding it) ....but my daughter is likely to go to law school or get an MBA - so, no, we aren't likely to have too much money - we'll just use it for grad school. Maybe I'll go get a Masters in History just for fun....I love school.

And if all else fails, it will still be in there when we are retired, and if we run out of money in our 401ks, our tax bracket will drop to the point where we won't lose 50%.....or it will still be there when we die and then I'm not paying the taxes at all - the estate will. If my kids are disappointed in their inheritance, I didn't raise them right.

As I said, nice problem to have. :)

(If you are thinking about 529s, do pick one where you can disburse direct to the beneficiary so you can use their tax rate. Not all have that feature.)
I don't believe in paying a dollar more in taxes than I can LEGALLY get by with. In the scenario you describe couldn't you use the 529 funds first and have the other less restricted dollars available just like you can take out tax and penalty free for scholarships and the like. I have no intention of my grandkids having student loans, my kids didn't because we saved and sacrificed to make sure they didn't.
For choices, I picked an age managed fund - or one that had age managed options. I could override, but I wanted a no brainer approach to college savings. The idea was to put money in and forget about it. I'm more active in the management of my personal portfolio and my retirement accounts.
I'm more of an aggressive mutual fund type of investor. No age or automatic adjustment options, I avoid them. And I'd likely keep it aggressive up until the very end in all likelihood. We've already started one for the 2 current grandkids but they're small, most of the dollars are in UGMA funds and ESA's but they're all young at this point. We went with what appeared to be the second best plan for us mostly because the upfront minimum on the best plan otherwise was more than we wanted to do right now and I already have an account with the management company for the that one as well.
 
I don't believe in paying a dollar more in taxes than I can LEGALLY get by with. In the scenario you describe couldn't you use the 529 funds first and have the other less restricted dollars available just like you can take out tax and penalty free for scholarships and the like. I have no intention of my grandkids having student loans, my kids didn't because we saved and sacrificed to make sure they didn't.
I'm more of an aggressive mutual fund type of investor. No age or automatic adjustment options, I avoid them. And I'd likely keep it aggressive up until the very end in all likelihood. We've already started one for the 2 current grandkids but they're small, most of the dollars are in UGMA funds and ESA's but they're all young at this point. We went with what appeared to be the second best plan for us mostly because the upfront minimum on the best plan otherwise was more than we wanted to do right now and I already have an account with the management company for the that one as well.
Have you looked at the S&P 500 ETF's? SPY, might have cheaper fees.
 
I don't believe in paying a dollar more in taxes than I can LEGALLY get by with. In the scenario you describe couldn't you use the 529 funds first and have the other less restricted dollars available just like you can take out tax and penalty free for scholarships and the like. I have no intention of my grandkids having student loans, my kids didn't because we saved and sacrificed to make sure they didn't.
I'm more of an aggressive mutual fund type of investor. No age or automatic adjustment options, I avoid them. And I'd likely keep it aggressive up until the very end in all likelihood. We've already started one for the 2 current grandkids but they're small, most of the dollars are in UGMA funds and ESA's but they're all young at this point. We went with what appeared to be the second best plan for us mostly because the upfront minimum on the best plan otherwise was more than we wanted to do right now and I already have an account with the management company for the that one as well.

I don't pay more taxes than I legally need to either. But if I legally need to pay more, that is a way better problem to have than being broke :)

I'd rather not have ended up in the situation I'm in with too much money - my brother in law was not supposed to die with any assets (we didn't plan on him dying at all) - and had that not happened I'd be golden - he inconsiderately died and left the kids money for college just after I said "that is a good amount of money given where my kids seem to be" - but IF I end up with penalties - and I'm at least six years from knowing if that is even likely - my daughter is a junior in high school - that is still a better deal than paying interest on loans. As much as I dislike paying taxes to the federal government - I HATE paying interest to a private corporation.
 
Have you looked at the S&P 500 ETF's? SPY, might have cheaper fees.
Limiting taxes, growth and the ability to transfer for college are the most important things to me. I'm not a big fan of 529's but they are the next best alternative for our purpose. I spent a lot of time looking for the best one that would give up the most control and best growth choices. I'm good with the market risk. I'm hoping they raise the ESA limits, I much prefer their setup.

I don't pay more taxes than I legally need to either. But if I legally need to pay more, that is a way better problem to have than being broke :)

I'd rather not have ended up in the situation I'm in with too much money - my brother in law was not supposed to die with any assets (we didn't plan on him dying at all) - and had that not happened I'd be golden - he inconsiderately died and left the kids money for college just after I said "that is a good amount of money given where my kids seem to be" - but IF I end up with penalties - and I'm at least six years from knowing if that is even likely - my daughter is a junior in high school - that is still a better deal than paying interest on loans. As much as I dislike paying taxes to the federal government - I HATE paying interest to a private corporation.
Nice problem but a sad way to get there. I'm sure you'll use the 529 funds first for applicable expenses so you can limit taxes and penalties. Who knows, maybe you'll have a family member you can bless with hem since the beneficiary can be changed fairly liberally.
 
I was 30, my husband was 35 when we bought in. With 4 kids it financially made sense to buy in.
 
Saving for college is my top priority, just slightly behind saving for retirement. We put $1200/month away for our two sons; that's $14,400/year. For 3 kids, $20k/year is totally reasonable -- unfortunately.

This is my go to site to help understand and plan for college savings. If you are saving for college, use their incredibly simple and clear calculator to figure out how much you need to save each month to reach your goals: www.savingforcollege.com
 
Saving for college is my top priority, just slightly behind saving for retirement. We put $1200/month away for our two sons; that's $14,400/year. For 3 kids, $20k/year is totally reasonable -- unfortunately.

This is my go to site to help understand and plan for college savings. If you are saving for college, use their incredibly simple and clear calculator to figure out how much you need to save each month to reach your goals: www.savingforcollege.com
It has been about 4 years since my last daughter graduated from college (debt free), so my knowledge is not current. But many years ago when I was looking at this, the website you mentioned was extremely helpful.

The market for 529 plans is a lot like the market for timeshares. The plans vary state by state (and you can usually get a plan from any state). Some states are the equivalent of "buying direct". These plans were awarded to political cronies of the government and charge high fees, front-end loads, and expensive actively managed funds. These plans are sold to people who don't have time to do their homework, and serve mainly to enrich the financial institutions.

Other states offer low fees and low cost index funds. Back when I was looking, Utah had one of the best plans, but my knowledge is severely out of date.
 
Back when I was looking, Utah had one of the best plans, but my knowledge is severely out of date.
Not that out of date! :) We live in PA but use the 529 plans in Utah. We originally opened a plan in NY for my older son, and keep a small amount there too; it's a decent plan but the fees were too high as the account got larger.

Upromise.com has put nearly another $5,000 in the NY 529 in the last 11 years. Free money for going through their site to shop online. Can't recommend it highly enough.
 
An instate school in our state with room and board, is approximately $32,000/year, right now.
 
Massachusetts has the UPlan which is a prepaid tuition plan at today's rates. Since college inflation seems to be higher than rates of return in the stock market it seemed like a good deal. Only catch is that the only colleges are in state institutions.
 
Massachusetts has the UPlan which is a prepaid tuition plan at today's rates. Since college inflation seems to be higher than rates of return in the stock market it seemed like a good deal. Only catch is that the only colleges are in state institutions.

That can be a great deal if you know that an in state state college will be best.

One of the biggest challenges is that you should start saving and planning long before your kid has developed the personality and shown the talents that indicate what kind of school they will likely be successful at. I have one headed off to small private liberal arts school in another part of the country - the best fit for her - and the other staying in town at a state tech college - the best fit for him. Pretty much polar opposites in post secondary education choices - and neither became obvious until high school (though in middle school there were strong indications of that sort of path).
 

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