ND College SAVE 529

[Whisky]

Just curious if there are a few people here who participate in ND's 529 plan for their kids?
How's the return been? I see they have a few different portfolio options. My kids are 2 and 3, so I'd be going aggressive if I participate.
Any issues fighting the state or feds on qualified or questionable "tax free" withdrawals.
Are there better options to invest in kids college fund?

Thanks

[Weekender]

I initially looked into a 529 plan for my child, but wasn't a fan of all of the stipulations. There's also the slim chance that your child wouldn't go to college (rare but could happen) and there would then be a lot of hoops to jump through to utilize those funds.

Instead I set up a custodial account through Edward Jones and went with reasonably aggressive investments. Once your child reaches the age of majority they gain control of the account and can do whatever they want with it.

[savage270]

I have them for my kids and there are really only 2 benefits for going that route. 1. State tax deduction for contributions. 2. There are some free matching programs where the state will put "free" money into the account. The investments are nothing special, but not bad either. Also if one of my kids ends up not needing the money for college, the funds can be used for the next kid. Now if kid #3 doesn't need the money, I guess I will take the tax penalty and move on with my life.

[49994]

I have started a roth IRA for my children instead of the 529. They can still take money out for college if they choose with no penalties. Plus if they end up not touching just think how much tax free money they will have access too when they are 60.
https://www.investopedia.com/roth-ir...-rules-4769951

[sierra1995]

I'm using the 529 program over the Roth IRA - simply because it can be used for generations. In savage's scenario, if kid 3 doesn't use it, Savage can keep the 529 going and continue to invest in it, then give it to his grandkids, and if they don't use, they can give it to their kids, and it will continue to grow. In the IRA option, (if not used for college), upon your death the funds have to be distributed to your beneficiaries. Your beneficiaries can choose to re-invest but I think there is some sort of penalty or tax? i'm not sure. In 49994's link, it mentioned that you'll have to claim income taxes on the gains in your Roth IRA if used for higher education.. where a 529 you don't.

If Savage does to decide to pay the taxes and the penalty on the 529, I think he is only taxed on the gains, and the 10% penalty comes off the gains... so he's still money ahead.

That is my interpretation. Signed - armchair investment/retirement guy.

[shorthairsrus]

I have started a roth IRA for my children instead of the 529. They can still take money out for college if they choose with no penalties. Plus if they end up not touching just think how much tax free money they will have access too when they are 60.
https://www.investopedia.com/roth-ir...-rules-4769951

I am glad to see you have a kid that works so his roth can be funded. Most of these kids now days dont work until they are in college; hence the roth is off the table. That goes back to my rant --- ND needs to look a "go to work plan for students" and less sports programs.

[Wall-eyes]

I do 529 from the Bank of North Dakota not crazy amounts just another money maker. One out of college, one about done. Damn they are not ficking cheap so invest wizely. I have few other things I did too. One with State Farm my guy and another with Edward Jones and another through POPS.

[KDM]

I've known a couple fellas that instead of playing stocks, 529's, roths, and the like. They bought their kids two gold coins per year until they were 18 and decided on what they wanted to do. Then they brought out the coins, set them on the table in front of the kid, and they were free to do with them what they wanted for whatever they wanted. Not traditional, but the risk and stipulations were almost non-existent. There are many ways to help set your kids up for when they enter the world other than the stock market.

[Captain Ahab]

I've been involved with investments all my life. I've rarely seen somebody "play" the stock market. Put your money somewhere besides a checking account. If you need help there are plenty of folks to help you. Do your due diligence and find somebody you feel comfortable with helping you in that direction. I don't think KDM is completely off base. A guy or a gal could do both. The ND plan has benefits, but other options have benefits too. There is no perfect investment.

[MuskyManiac]

I've been involved with investments all my life. I've rarely seen somebody "play" the stock market. Put your money somewhere besides a checking account. If you need help there are plenty of folks to help you. Do your due diligence and find somebody you feel comfortable with helping you in that direction. I don't think KDM is completely off base. A guy or a gal could do both. The ND plan has benefits, but other options have benefits too. There is no perfect investment.

Trying to time the stock market is one of the worst things you can do IMO. Buy quality and hold and reinvest dividends if they have any.

[Phill Latio]

I have them for my kids and there are really only 2 benefits for going that route. 1. State tax deduction for contributions. 2. There are some free matching programs where the state will put "free" money into the account. The investments are nothing special, but not bad either. Also if one of my kids ends up not needing the money for college, the funds can be used for the next kid. Now if kid #3 doesn't need the money, I guess I will take the tax penalty and move on with my life.

this is pretty spot on. I have two kids on BND 529 and one on vanguards 529. The vanguard definitely does better but don’t have that state tax deduction as an option.

[Allen]

If the kid doesn't use the 529 funds up, switch the beneficiary to yourself and take a cooking class in Venice. It will cover airfare, hotel, cost of class, etc.

At least, that's my plan.

[Phill Latio]

another huge bonus to the 529 plan (if you think of it the way i did) is all your kids get a Ugift code. Meaning anyone can contribute to their account very easily with this code. So basically what i do is every birthday and holiday i tell the grandparents on each side to put money into their account using their Ugift codes instead of a bunch of useless presents. Then (this step is important) i proceed to tell the grandparents how much the other grandparents have been contributing so of course their gets a little competition between them and the money rolls in...

They also get to use those contributions for state tax deductions IF they are ND residents.

But yeah the returns suck. One of my kids earnings was $320 on $6200 for last year so a whopping 5%

[KJS - ND]

Since this started about the time we started having kids, we've been using the ND plan for probably close to 20 years. I liked that you can opt to have the fund adjust level of 'aggressiveness' based on their age and it will do this automatically every few years. Like every investment, I'm sure there would have been better places to put the funds that would have done better, but sticking in a little every month can make a difference if you start early - doesn't have to be that much to amount to a decent balance eventually.

ND plan is easy to contribute and easy to pull out funds. Guessing there are other options that can do everything the ND plan can do also but I'd give it a thumbs up from my experience. Just get something started sooner rather than later - time in the market is more important than timing the market as we've all heard numerous times.