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IRAs or 529s, or both for college?

bowhunter1023

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#1
We opened a 529 for K when she turned 1, but have not done anything for Kenna yet because I've been stuck between an IRA and a 529 for her too. The cash in the gun safe method has worked well enough, but I need to do something with that money. Curious as to what you fellers had to say on the subject. Thanks in advance for the input!
 

"J"

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#2
The problem with the 529’s if I remember right, is you don’t collect interest on it. Might want to think of a fund that does pay interest as you sock the money away...
 

Mike

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#5
529s for both boys. Depending on what they decide to do and where they they end up going, it will help a lot or a little.
 

jagermeister

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#8
My financial advisor recommended against 529s.

I personally don't see the point in saving money specifically for college when, this early in the game, you have no idea whether the kid will even go to college. Put it in an IRA... Roth or Traditional, whatever makes the most sense for a given year. Or just open an aggressive brokerage account... Something you can access without penalty if you want. Need money for a car, it's there. Money for school, it's there. Fall on hard times, it's there. Keep your options open.
 
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jagermeister

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#11
Screw them. My kids are on their own. I guess I'm no help here.
Another reason not to do a 529. Who knows... Maybe they get to be 18 and they act like spoiled little assholes that don't deserve the help... Keep that money for momma and poppa. I think there's something to be said for not paying their way anyway. I've seen quite a few people get put through college with absolutely no appreciation or concept of it's magnitude, simply because they weren't paying their own way.

My plan is, if my kid wants to attend college, first two years are on them. Apply for scholarships if you want help. Then if they prove their dedication, I'll cover the last two years. Or I'll just help them get on their feet with a little something after they graduate.
 
#12
The 529 plan I have also has current year tax advantages (unlike a ROTH). Maybe Ohio’s does too?

A brokerage account offers no tax advantages. And is too liquid, therefore can be easily wasted on something you may not really need.

If you are considering using a traditional IRA to fund college, I hope your kids won’t go to college until you are 59 1/2.

ROTH and 529 are both tax advantaged so do both. And remember what you are saving for.

And everyone situation is different. Do some research and do what is best for you and your family.
 

hickslawns

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#13
(I guess I do have one thought to offer which might be useful.) Don't rule out whole life insurance policy. We started one on our kids when they were 1mo old. We own it. We can give it to the kids later. It can be used to buy a home, pay for college, hardships, etc. We haven't decided when we will be giving it to them. Before college? After college? During? Not sure. If they don't go to college, they can continue paying the monthly premium and use it for their retirement.
 

aholdren

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#14
(I guess I do have one thought to offer which might be useful.) Don't rule out whole life insurance policy. We started one on our kids when they were 1mo old. We own it. We can give it to the kids later. It can be used to buy a home, pay for college, hardships, etc. We haven't decided when we will be giving it to them. Before college? After college? During? Not sure. If they don't go to college, they can continue paying the monthly premium and use it for their retirement.
We did the same Phil! When our first was born I decided after doing my research, that this would be my best fit. We opened one on both me and my wife. I have monies in the market for my retirement and figured I didn't want all my eggs in 1 basket. Everyone has a different situation and this is not for everyone.
College is a huge expense and your all ready ahead of the game by starting now, I don't think you'll go wrong either way.
 

hickslawns

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#15
We did the same Phil! When our first was born I decided after doing my research, that this would be my best fit. We opened one on both me and my wife. I have monies in the market for my retirement and figured I didn't want all my eggs in 1 basket. Everyone has a different situation and this is not for everyone.
College is a huge expense and your all ready ahead of the game by starting now, I don't think you'll go wrong either way.
Agreed. Diversify. And God forbid you actually needed to bury a child. The money is there. I'm thinking $25-50k. Enough to bury and cover a fraction of the counseling it would require to deal with the loss.