Author Topic: Best education savings vehicle in California  (Read 535 times)

affordablehousing

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Best education savings vehicle in California
« on: December 06, 2018, 03:37:06 PM »
Hi gang, What is the best savings mechanism for school (high school and college) if you live in California? It seems the 529 provides no state tax relief so wondering what the hive mind found most beneficial. Family members have asked about contributing.

Gin1984

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Re: Best education savings vehicle in California
« Reply #1 on: December 08, 2018, 07:53:50 AM »
You could use a custodial account, assuming you are planning to use it up in high school.

ManyMountains

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Re: Best education savings vehicle in California
« Reply #2 on: December 17, 2018, 10:53:56 PM »
We are also in California and had the same question. I can't tell you which is better - a custodian account or 529 - assuming you are the one managing it.

With no tax benefit to us, we opted to have my wife's parents open up the 529 account for our children through Vanguard. The grandparents do receive a tax benefit in their state. Also, it helps our children because a 529 managed by the grandparents does not count towards assets for Financial Aid, though it would count if we managed the 529. Also, they're

So, this doesn't directly answer your question but might offer you an idea on how you could optimize your situation by thinking outside the box.

Another consideration is that a Roth IRA allows you to take out money penalty free prior to 59.5 years of age, if it is used for your childrens' college costs.

madamwitty

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Re: Best education savings vehicle in California
« Reply #3 on: December 30, 2018, 08:14:02 PM »
Be aware that payments for college expenses coming from a grandparent’s 529 account counts as “income” to the student (for FAFSA purposes) and will be assessed at a higher percentage rate for EFC.

For the OP’s question, we ended up just using Scholarshare, California’s 529 plan. Since we don’t have family in another state that can take advantage of an income tax incentive, we decided not to think too hard about it. It has some age-based, low cost passive funds which are comparable (I think) to Vanguard 529 plans from other states. Occasionally I see a sign up incentive of $50. (They’ll add money to the account if you open it with a certain minimum balance.)

We are also in California and had the same question. I can't tell you which is better - a custodian account or 529 - assuming you are the one managing it.

With no tax benefit to us, we opted to have my wife's parents open up the 529 account for our children through Vanguard. The grandparents do receive a tax benefit in their state. Also, it helps our children because a 529 managed by the grandparents does not count towards assets for Financial Aid, though it would count if we managed the 529. Also, they're

So, this doesn't directly answer your question but might offer you an idea on how you could optimize your situation by thinking outside the box.

Another consideration is that a Roth IRA allows you to take out money penalty free prior to 59.5 years of age, if it is used for your childrens' college costs.

ManyMountains

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Re: Best education savings vehicle in California
« Reply #4 on: January 02, 2019, 09:44:27 PM »
Be aware that payments for college expenses coming from a grandparent’s 529 account counts as “income” to the student (for FAFSA purposes) and will be assessed at a higher percentage rate for EFC.

Thanks for the additional detail - much appreciated! I didn't know that. It doesn't change our plans, as we have a few ways that we plan to pay for college and will try to maximize efficiency about how/when/where it is used.