The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: tariskat on August 14, 2014, 09:32:58 AM
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Hi friends,
I have a niece and would like to contribute money to her future for a while (she is too young to remember whether or not I got her an actual present, and possibly to know why she gets presents at all, still). She has a 529 through Edward Jones. I have heard extremely underwhelming things about EJ for every other retirement plan, so does anyone here have knowledge or experience with their college savings plans?
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Don't know for sure about all 50 states, but you may not need to go through a broker at all. E.g., see Michigan's (https://www.misaves.com/) and Utah's (http://www.uesp.org/About-UESP/Utah-s-529-Plan.aspx) sites where you can invest directly.
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There is an existing Edward Jones 529; if I didn't want to do that particular plan, I would basically have a start a new account for her.
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I live in GA and if I contribute to their 529 I get a deduction on my state taxes. I believe you can open your own 529, you would be the "owner" of the account and she would be the "beneficiary".
I favor contributing to Roth IRA's before doing 529's, anyway. You can still pull the money out for education expenses without a penalty, but then you don't get hit with the penalty if you end up not using it (she gets a scholarship or doesn't go to college). I know you want something that's "hers", but I'd contemplate doing a Roth for yourself first and you could always withdraw to pay for her education later. You'll have to check with the IRS, but I believe you can pull from your Roth for education expenses as long as the person is related to you. Should be in either Publication 590 or 970.
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Oh! That never crossed my mind. Thanks for the info.