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Putting spare money into taxable account or 529?

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  • Putting spare money into taxable account or 529?

    If all the retirement accounts and loans are taken care of already, what ratio of putting money into taxable account vs 529 would make sense?

  • #2
    Would depend on how your current assets relative to financial independence number/how well you're doing overall, whether you plan on fully or partially funding education/529 goal amount (most states will make you stop contributing once the accounts pass a certain value), your age relative to planned retirement age and the number and age of children/time horizon.

    We chose to superfund 529s since it looked like the best post-tax return we could get compared to a taxable account. After that, went back to taxable.

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    • #3
      We’re not doing a ratio. We’re maxing out our state deduction each year divided evenly between our kids and putting the rest in taxable. Some months it’s 0 into taxable, others a few thousand depending on expenses. This will likely be enough for us to cover 60-80% of in-state college for each assuming reasonable returns. Also have the house scheduled to be paid off when first kid leaves for school so we could presumably cash flow any significant overages not covered by scholarships.

      hope this helps.

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      • #4
        Originally posted by VentAlarm View Post
        We’re not doing a ratio. We’re maxing out our state deduction each year divided evenly between our kids and putting the rest in taxable. Some months it’s 0 into taxable, others a few thousand depending on expenses. This will likely be enough for us to cover 60-80% of in-state college for each assuming reasonable returns. Also have the house scheduled to be paid off when first kid leaves for school so we could presumably cash flow any significant overages not covered by scholarships.

        hope this helps.
        This is also what we are doing. Hopefully we will have saved enough, but if not we should be able to cash flow the difference.

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        • #5
          Front load the 529 to meet your goals.

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          • #6
            Really depends on where you are in the journey. Five year reassess cycles.

            Early....front load. easy decision.

            Once in primary school you will start having a clearer view of costs and determining 529 vs taxable .

            Middle school.. how about grad school? Private school in the mix?


            ​​​​

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            • #7
              What percentage are you paying to retirement? You say retirement accounts are taken care of but that means something different to everyone...

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