$5k*14 years is $70k, maybe your returns kick in $140k. That is not at all an excessive amount of money to put a kid through college, IMHO. If your student happens to be academically awesome and gets a bunch of merit scholarships, having $140k saved against $80k of need is NOT a failure at all - also you can pull things out without penalties against scholarship money (you still pay income tax on earnings, though, and your state tax deduction may be clawed back somehow if not used for educational expenses).Curious…what do people consider “overfunding” for a 529?
We are doing $5k per child, started at birth. They’re 2 and 4. The state tax deduction max here is $10k so that’s what we chose.
In 14 years will we be overfunded?
Also, you can always shift your investments towards fixed-income in the later years if you worry you're going to overshoot, in exchange for more equity in another account. Or you could pass excess to the beneficiary's Roth IRA. Or you could just transfer ownership to them and let them pay income taxes on a lower amount if they want to, or keep it for their kids or for further educational expenses.
Statistics: Posted by shess — Fri Apr 05, 2024 11:56 pm — Replies 13 — Views 1659