529 Plan

[dullard]

I totally understand your point, but an HSA has... uhhh...a certain... REQUIREMENT... that is a bit large compared to others.

It means you have to have shitty insurance at all times if you want to contribute. Anyone that is employed is likely in the same boat. Don't get me wrong, I would totally have an HSA if my insurance wasn't so good.

My point still remains, you're an idiot if you fund a 529 but don't max out your 401k/IRA.

Look over the tax situation again. Taxwise, a 529 is equal to (if you don't get to deduct contributions) or better than (if you do get to deduct contributions) when compared to the Roth IRA that you say is so much better. Either way, the gains are tax free. You are more restricted with the 529, but assuming the restrictions either don't matter or don't apply, then the 529 is often better tax wise.

HSA aren't necessarilly shitty insurance either. I have had one for years. My monthly premium for a FAMILY is under $40, yearly doctor and eye visits are free, and I get the lowest negotiated insurance costs for specialists and prescriptions, although I generally pay for that out of pocket. In a normal year, my family pays <$40*12 = <$480 total. In the WORST case scenario, I have to pay the maximum out of pocket amount ($6000 for my family at my employer, $12,900 maximum for a family by law). So, my health bills range from <$480 in a typical year to $6000 in the absolute worst case scenario year. I wouldn't call that shitty at all. I know a lot of families on normal insurance that pay nearly $5000 a year in premiums AFTER their company pays a good chunk of it and then their costs just go up after that depending on how much health care they use.

 

[vi edit]

Another argument for the 529 since we are ATOT ballers is that it doesn't have the phase out after 183k AIG for married families. Roth does.

 

[edro]

I have an HSA thread somewhere on here.

I used to have one, but my new insurance is "too good" to qualify for one.
And by "too good" I really mean "as shitty as it can get and not qualify".

My deductible is $800 and the limit to be considered High Deductible Health Plan is $1300 deductible.

 

[WackyDan]

I started a 529 when my daughter turned 1. Went with the Utah fund. It had a higher start up deposit, but it was Vanguard and so that was attractive. It was also one of the best historical performers and has returned 12% per year for dam near four years now.

Here in NC, the performance of their fund sucks so using another state fund was more beneficial than the tax deductions for contributions per year in NC. Another ding against NC was that they phase out the tax incentives after 100k of income and put that in effect just as I was finalizing my choices.

Can't go wrong with a 529.

AS for the poster who suggested you shouldn't have a 529 unless you max your 401k and other retirement accounts.... That is bullshit. I'd rather pop $100+ per month into my daughter's 529 knowing that can be withdrawn TAX FREE when she starts college. It also ensures there is a separate pool of money dedicated to her education so that I don't have to use my retirement funds to fund her college ambitions. That was bad advice that was given. Yes, you should be saving for retirement, but you should not ignore the tax advantages of the 529 when it comes to time to withdrawal.

 

[edro]

AS for the poster who suggested you shouldn't have a 529 unless you max your 401k and other retirement accounts.... That is bullshit. I'd rather pop $100+ per month into my daughter's 529 knowing that can be withdrawn TAX FREE when she starts college. It also ensures there is a separate pool of money dedicated to her education so that I don't have to use my retirement funds to fund her college ambitions. That was bad advice that was given. Yes, you should be saving for retirement, but you should not ignore the tax advantages of the 529 when it comes to time to withdrawal.

According to him, you should always max your Roth first, then start a 529.
Roth can be used for education, and anything else and is also tax free withdraw.
I tend to agree, considering you can withdraw Roth principal without tax or fee for ANY reason in the future.
It basically is a savings account with very high interest.

529 is education only.

 

[WackyDan]

According to him, you should always max your Roth first, then start a 529.
Roth can be used for education, and anything else and is also tax free withdraw.
I tend to agree, considering you can withdraw Roth principal without tax or fee for ANY reason in the future.
It basically is a savings account with very high interest.

529 is education only.

You can only withdrawal on the principle of the ROTH for qualified expenses - Education being one of them. If you go beyond that you will pay a penalty if you are not yet 59 1/2 years old.

Furthermore you can not contribute to a ROTH if you make over $176k a year married or $120k per year single. Now, I know that seems like a lot of coin to some people here, but many AT forum posters make more than those amounts.

I still see the 529 as the best option for education saving especially if you think you'll benefit from having that dedicated silo of savings or if your income is likely to rise and put you over the limits of a ROTH.