Author Topic: Separate 529 Account for Each Kid?  (Read 1453 times)

Platypuses

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Separate 529 Account for Each Kid?
« on: June 17, 2020, 08:23:32 AM »
I have 4 kids, 3 of which have 529 accounts. I don't plan to fully pay for college, but to have some set aside for each of them. I like having individual accounts designated for each kid, but is it financially beneficial to not start a 4th account and just put the money in another kids account?

Laura33

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Re: Separate 529 Account for Each Kid?
« Reply #1 on: June 17, 2020, 09:04:47 AM »
Not that I'm aware of.  In fact, it may be financially beneficial otherwise, if your state provides a tax break on a per-account basis as mine does, and you're not already maxed out on the available deduction.

ambimammular

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Re: Separate 529 Account for Each Kid?
« Reply #2 on: June 18, 2020, 02:18:39 PM »
In my state 529 there is a small annual maintence fee, but I can't bring myself to pay it for 18 years just for funzies, so we keep both girls' college dollars together. We will have to change the beneficiary at some point to catch child #2. But our plan right now is to give them even amounts of whatever we can acquire.

Honestly, I've told them that I'm open to that being a business start or a duplex downpayment or some other passion/career investment. There are many paths. If neither opt for college I guess we'll pay the tax to get it out, but I'll be a bit surprised if neither goes to college, as their dad is a professor.

ambimammular

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Re: Separate 529 Account for Each Kid?
« Reply #3 on: June 18, 2020, 02:28:03 PM »
I will say it annoys me to have the 529 mentioned in the will/trust under one kid's name, but not the other. We've been transparent with our girls that it's for both of them, and we'll keep a even balance, but I'd be devistated if something crazy DID happen and child #2 thought for a moment they were less thought of.

So maybe I'm talking my cheapass into paying an annual love-you-both insurance fee.

Lucky Recardito

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Re: Separate 529 Account for Each Kid?
« Reply #4 on: June 18, 2020, 02:33:02 PM »
One thing that may make a difference is whether the kids are close in age or not, as you may want to have a different investment strategy for each. (More aggressive investments for a young kid; less risky when college is just a few years away. You'd time that transition differently for each child.) Less of an issue if they're around the same age, and will be paying for college within a couple of years of one another.

Paul der Krake

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Re: Separate 529 Account for Each Kid?
« Reply #5 on: June 18, 2020, 02:39:48 PM »
I will say it annoys me to have the 529 mentioned in the will/trust under one kid's name, but not the other. We've been transparent with our girls that it's for both of them, and we'll keep a even balance, but I'd be devistated if something crazy DID happen and child #2 thought for a moment they were less thought of.

So maybe I'm talking my cheapass into paying an annual love-you-both insurance fee.
Have you left instructions in your will that the 529 is to be treated as a joint account by whoever will be asked to manage it should you croak early?

If that's clearly communicated to everyone involved, I don't see a problem.

AMandM

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Re: Separate 529 Account for Each Kid?
« Reply #6 on: June 18, 2020, 02:44:10 PM »
At least in my state, you will at some point have to create a 4th account. You can't pay for child #4's expenses out of an account that has someone else named as the beneficiary. Or if child #1 is out of college by then, you could change the beneficiary on that account from #1 to #4.

In my state, it wold be beneficial to open a 4th account because you can either (a) deduct your contributions from your state income or (b) apply for a $250 donation to each account by the state.

tooqk4u22

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Re: Separate 529 Account for Each Kid?
« Reply #7 on: June 18, 2020, 03:25:19 PM »
I don't get any benefits/deductions but we opened an account for each kid - 3.   Reasons include kids are close in age/grade enough where it would affect withdrawals and slightly different strategies based on age.  We also did large lump sum contribution that would have exceeded gifting limits for just one account. 

socaso

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Re: Separate 529 Account for Each Kid?
« Reply #8 on: June 19, 2020, 03:18:28 PM »
Whether or not there's a financial benefit there may well be a "no fights" benefit so that each kid knows how much college $ is their own. What if you have Kid A and Kid B's money stored in the same account and Kid A decides they want to pursue grad school and starts pitching a fit about what they perceive "their" money should be?

YttriumNitrate

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Re: Separate 529 Account for Each Kid?
« Reply #9 on: June 19, 2020, 03:49:04 PM »
In my state 529 there is a small annual maintence fee, but I can't bring myself to pay it for 18 years just for funzies, so we keep both girls' college dollars together. We will have to change the beneficiary at some point to catch child #2. But our plan right now is to give them even amounts of whatever we can acquire.

Your profile says you're in Indiana, so assuming you're an Indiana resident, or your kids are Indiana residents, you shouldn't be paying a maintenance fee.

Quote
What are the fees associated with CollegeChoice 529?
CollegeChoice 529 has no commissions, loads, or sales charges. The total annual asset-based fee varies from 0.18% to 0.82%, depending on the Portfolio you choose. In addition, an Annual Account Maintenance Fee of $20 will be charged to each of your Accounts unless your combined Account balance for your Beneficiary is equal to or greater than $25,000 or if you or your Beneficiary is an Indiana resident.
https://www.collegechoicedirect.com/home/frequently-asked-questions.html

Beach_Stache

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Re: Separate 529 Account for Each Kid?
« Reply #10 on: June 20, 2020, 04:51:50 AM »
In VA you get a tax write off for each account and you can have multiple accounts per kid.  We have 3 boys and I have a separate account for each of them b/c I can get a state tax deduction of up to $4k per account per year.  We put in 3k/3k/4k (for the one who's a bit behind) so we get a state tax write off for 10k/year which is nice!  I think if your state has an offer like that and you'd be maxed out with your accounts then it makes sense to open another account, and even open an account in the mother and father's name so you can get more, but I think most people can only handle maxing out 1 account (if any).  So that's the reason I have a separate account for each kid, and if I could do more I would have DW open an account, however for state college I think that's probably enough.

Morning Glory

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Re: Separate 529 Account for Each Kid?
« Reply #11 on: June 20, 2020, 06:20:24 AM »
Check your state's rules carefully, you may be able to get the tax deduction even if you invest in another state's plan (not all states allow this). I use Nevada's because it is managed by Vanguard so I can see it with my other accounts, and the fees are really low.

 Where I live the deduction is limited to $3000 per married couple regardless of number of children, so there is no incentive to have separate accounts for each kid. The deduction is net of withdrawals so you can't deduct contributions to a younger child's plan once you start withdrawing from the oldest, which makes the calculation of how much to contribute for each kid really confusing. I have a low enough AGI to get a sweet $500 state tax credit for my first $1000 contribution, which is even better than the deduction.

ambimammular

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Re: Separate 529 Account for Each Kid?
« Reply #12 on: June 22, 2020, 07:49:24 AM »
In my state 529 there is a small annual maintence fee, but I can't bring myself to pay it for 18 years just for funzies, so we keep both girls' college dollars together. We will have to change the beneficiary at some point to catch child #2. But our plan right now is to give them even amounts of whatever we can acquire.

Your profile says you're in Indiana, so assuming you're an Indiana resident, or your kids are Indiana residents, you shouldn't be paying a maintenance fee.

Quote
What are the fees associated with CollegeChoice 529?
CollegeChoice 529 has no commissions, loads, or sales charges. The total annual asset-based fee varies from 0.18% to 0.82%, depending on the Portfolio you choose. In addition, an Annual Account Maintenance Fee of $20 will be charged to each of your Accounts unless your combined Account balance for your Beneficiary is equal to or greater than $25,000 or if you or your Beneficiary is an Indiana resident.
https://www.collegechoicedirect.com/home/frequently-asked-questions.html

Oooo! I missed this! Okay! So, we'll start a second account.

Thanks, I love this forum!

 

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