I have one child that is a senior in high school (going to an college this fall) and another one that is a freshman in high school. I already took out 529s before they were born, and have been contributing to them monthly since then. I have managed to save a great deal already, but not enough since college costs have skyrocketed. I will need the funds very soon, within 4 months and 3 years respectively. I have not contributed much to my IRAs; they have grown mostly from investment earnings. So I guess my point was I'm not sure how much I would be able to take out of the IRAs for college now, when I need the money so soon. BUT, I could stop contributing to the 529 for my freshman in high school child and re-direct what I was contributing to the 529 to my IRA, so that at least for that child, I can use the IRA to pay for college for whatever the 529 assets do not cover. I am no longer contributing to the 529 for my senior in high school school child who is going to college in the fall.
JET1005,
"You can only withdraw contributions, not investment earnings, and there are limits."
A) If someone could only pay whatever amount is in the Roth IRA contribution, why would this matters? 12K X 18 years = 216K is more than most people could afford to pay.
"Plus, using a Roth IRA to pay for college may cause us to receive less financial aid."
B) 529 is even worse. It is counted whether you withdraw or not.
C) A person could always take a student loan first and pay it off later with Roth IRA to avoid FAFSA. You do not have that flexibility with 529s.
"I have much more flexibility with the 529 and have been very happy with my 529 provider (Utah/Vanguard) so far."
D) So far, you have proven my point that 529 is a bad idea.
KlangFool
Statistics: Posted by JET1005 — Sun Mar 10, 2024 10:30 pm