WSJ article: "Now He's After Middle-Class Savers"

[KES]

I think if you google the title as is you can get the article without a subscription. When I read it I immediately thought of the Mustachians.

"President Obama is pitching his new tax plan as a way to help the middle class at the expense of the rich. But middle-class savers are bound to notice if he achieves two of the White House’s stated goals—to “roll back” tax benefits of 529 college savings plans and “repeal tax incentives going forward” for Coverdell Education Savings Accounts."

"The White House goal seems to be to discourage private thrift, and encourage greater use of government benefits, when paying for college."

I was just going to look into opening 529s for my kids, should I not now?

[justajane]

This is exactly why we are intending to use our Roths as our primary savings vehicle for college. That and paying off our mortgage so that we can devote a lot of our income at the time to paying tuition. At any point the rules could change and the FAFSA might hold it against you more when calculating parental contribution.

We have a 529 but only contribute to it halfheartedly and direct well meaning relatives to donate to it instead of giving us toys we don't need. They rarely if ever take us up on it. I think the account only has around $4,000 in it.

[KES]

That's a great idea, I never thought of using a Roth as a college savings plan, but it makes sense. Am I understanding correctly that I can take out anything I put in 5 years later tax free?

[Homey The Clown]

If you aren't already maxing out a Roth, you should. It provides the same tax benefits as a 529 (currently). You can withdraw the deposits any time tax free. You can only withdraw the interest after 59.5. If you aren't maxing out your Roths (yours plus spouses), you shouldn't touch a 529. The 529 will be counting against your FAFSA, but the Roth won't.

[Bob W]

Hire you kids to work for you from ages  7 on up.  Pay them 7K a year to do what ever jobs need to be done.   Then they stick their money in Roths.  Use the A+ program (first 2 years free) and then finish in a really cheap state school paying with jobs.  By age 30 they will be FIRED even at a school teacher's pay.

The education plan is not as important as the FIRE plan for them.  Some people pay 200K for the same degree that can be had for 15K.   

[KES]

Wow Bob, you just blew my hair away. Time to start spending more time on this forum!
We're not quite at the place where we're maxing out 401ks or Roths, but we're moving closer to that every year.

[TrulyStashin]

529 tax advantages are state-run programs.  To my understanding and knowledge, there is no federal tax credit for 529 investments.

The feds can't end programs/ credits that the states choose to grant for state taxes.  I call bullshit scare-mongering.

[RangerOne]

I am all for revamping the tax code.

However there isn't a program they can change without hurting some and helping others... I need to open a Roth IRA in addition to the 401k. As soon as my student loans are gone...

[Paul der Krake]

529 tax advantages are state-run programs.  To my understanding and knowledge, there is no federal tax credit for 529 investments.

The feds can't end programs/ credits that the states choose to grant for state taxes.  I call bullshit scare-mongering.

The 529 is named after the federal tax code, and while you're right that they can't take away the state tax incentives, they absolutely can get rid of the tax free growth properties.

[RangerOne]

I will say as a young democrat that I am starting to feel more and more like democrats are trying to fix problems that are, at least in part, exacerbated by the financially inept and as a result are punishing the financially responsible.

    Most of Obama's state of the union and other statements recently are nothing more than political posturing to drum up support for the party during next election. I wouldn't hold my breath on any of the tax reform talking points having a real effect in the next 3 years.

[TrulyStashin]

529 tax advantages are state-run programs.  To my understanding and knowledge, there is no federal tax credit for 529 investments.

The feds can't end programs/ credits that the states choose to grant for state taxes.  I call bullshit scare-mongering.

The 529 is named after the federal tax code, and while you're right that they can't take away the state tax incentives, they absolutely can get rid of the tax free growth properties.

Ah ha, got it.  Still, I can't see this happening.  I'm surprised it's even an idea.  Especially from a Democrat.

[Gin1984]

If you aren't already maxing out a Roth, you should. It provides the same tax benefits as a 529 (currently). You can withdraw the deposits any time tax free. You can only withdraw the interest after 59.5. If you aren't maxing out your Roths (yours plus spouses), you shouldn't touch a 529. The 529 will be counting against your FAFSA, but the Roth won't.

Not true.  College, as well as a first house is considered a qualfying event and you can take the interest out a Roth for those without penalty.

[Gin1984]

Wow Bob, you just blew my hair away. Time to start spending more time on this forum!
We're not quite at the place where we're maxing out 401ks or Roths, but we're moving closer to that every year.

Then you don't need to even think about a 529.  Which is why Obama was going after them.  For many middle class, they really are not relevant. 

[gimp]

Most of ... state of the union and other statements ... are nothing more than political posturing to drum up support for the party during next election. I wouldn't hold my breath on any of the tax reform talking points having a real effect in the next 3 years.

You're older and wiser than you were :) State of the union addresses are very rarely anything except for posturing and dick-waving.