Hi Everyone,
I am planning for my children's 529s and have a question. My children are ages 6 and 2. Our state is Maryland. We have Maryland state 529 plans and make regular monthly contributions to maximize the state tax deduction.
6 y.o.: $36,000 invested in an S&P 500 Index Fund
2 y.o.: $11,000 invested in an S&P 500 Index Fund.
My question has to do with asset allocation in college. I have seen the Bogleheads article on glide paths for college plans https://www.bogleheads.org/wiki/Glide_p ... e%2018%2B. However, we have a unique situation.
My wife works for the state and her employer will provide our children with free tuition to any state university. My wife's job is very secure and she has no plans to leave. So, we will hopefully only be on the hook for room and board. With that in mind, I have been wondering if a more aggressive asset allocation close to and during college makes sense.
First, due to a recent IRS rule change, we can now rollover unused 529 funds into a Roth IRA for each dependent. So, if the money keeps growing it can kickstart their retirement. Second, due to the SECURE Act it is now possible to use up to $10,000 from a 529 plan (lifetime limit) to pay back student loans.
The plan would be to invest in 50% stocks / 50% bonds during college. Graduate school is a real possibility, so we would want the money to keep growing. If the market rises, great. If the market falls, we can use personal funds and student loans, if necessary, to make up the difference. And, of course, if my wife leaves her job when our children are in college or close to college, we would change the asset allocation immediately.
Is this a reasonable plan? Thank you!
I am planning for my children's 529s and have a question. My children are ages 6 and 2. Our state is Maryland. We have Maryland state 529 plans and make regular monthly contributions to maximize the state tax deduction.
6 y.o.: $36,000 invested in an S&P 500 Index Fund
2 y.o.: $11,000 invested in an S&P 500 Index Fund.
My question has to do with asset allocation in college. I have seen the Bogleheads article on glide paths for college plans https://www.bogleheads.org/wiki/Glide_p ... e%2018%2B. However, we have a unique situation.
My wife works for the state and her employer will provide our children with free tuition to any state university. My wife's job is very secure and she has no plans to leave. So, we will hopefully only be on the hook for room and board. With that in mind, I have been wondering if a more aggressive asset allocation close to and during college makes sense.
First, due to a recent IRS rule change, we can now rollover unused 529 funds into a Roth IRA for each dependent. So, if the money keeps growing it can kickstart their retirement. Second, due to the SECURE Act it is now possible to use up to $10,000 from a 529 plan (lifetime limit) to pay back student loans.
The plan would be to invest in 50% stocks / 50% bonds during college. Graduate school is a real possibility, so we would want the money to keep growing. If the market rises, great. If the market falls, we can use personal funds and student loans, if necessary, to make up the difference. And, of course, if my wife leaves her job when our children are in college or close to college, we would change the asset allocation immediately.
Is this a reasonable plan? Thank you!
Statistics: Posted by Therapist Investor — Tue Feb 27, 2024 9:52 pm — Replies 3 — Views 450