College 529 fund question

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ubascuba
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Re: College 529 fund question

Post by ubascuba »

For those that have done a custodial Roth IRA, who did you go with? My understanding is that not all brokerages offer this. Thanks
Ubascuba
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Bubba
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Re: College 529 fund question

Post by Bubba »

ubascuba wrote: Mon Jan 10, 2022 10:58 am For those that have done a custodial Roth IRA, who did you go with? My understanding is that not all brokerages offer this. Thanks
Check Schwab and TD Ameritrade. I also like Fidelity, but I think they have certain rules setup for their custodial Roth IRAs.

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Scarfinger
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Re: College 529 fund question

Post by Scarfinger »

ubascuba wrote: Mon Jan 10, 2022 10:58 am For those that have done a custodial Roth IRA, who did you go with? My understanding is that not all brokerages offer this. Thanks
Fidelity
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund or variation of

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Scarfinger
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Re: College 529 fund question

Post by Scarfinger »

Flaws with Using a Roth IRA to Save for College:

Distributions from a Roth IRA, even a tax-free return of contributions, will count as income on a subsequent FAFSA. Regardless of whether the distribution is included in AGI or counted as untaxed income, it may reduce eligibility for need-based aid by as much as half of the distribution amount.

The mere existence of a Roth IRA will not affect eligibility for need-based aid. However, if the taxpayer uses the money in a Roth IRA to pay for college, it will reduce eligibility for need-based aid in a subsequent year. 529 college savings plans have a much more favorable impact on the expected family contribution (EFC) than a Roth IRA.


The 529 is better for college expenses because it doesn't count as income when you use it like a Roth would.

In a perfect world you would have both I guess. I don't expect that my custodial Roth will be used for college and I will encourage my nephew to never touch it until retirement.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund or variation of

Bubba
Posts: 267
Joined: Thu Mar 05, 2020 3:40 am

Re: College 529 fund question

Post by Bubba »

Scarfinger wrote: Tue Jan 11, 2022 3:36 pm Flaws with Using a Roth IRA to Save for College:

Distributions from a Roth IRA, even a tax-free return of contributions, will count as income on a subsequent FAFSA. Regardless of whether the distribution is included in AGI or counted as untaxed income, it may reduce eligibility for need-based aid by as much as half of the distribution amount.

The mere existence of a Roth IRA will not affect eligibility for need-based aid. However, if the taxpayer uses the money in a Roth IRA to pay for college, it will reduce eligibility for need-based aid in a subsequent year. 529 college savings plans have a much more favorable impact on the expected family contribution (EFC) than a Roth IRA.


The 529 is better for college expenses because it doesn't count as income when you use it like a Roth would.

In a perfect world you would have both I guess. I don't expect that my custodial Roth will be used for college and I will encourage my nephew to never touch it until retirement.
Coverdell also doesn't get counted as income. 529 allows you to put more money away for college, but a Coverdell is more flexible and is less costly (and allows you to invest as you please).

Here is some light reading https://www.thebalance.com/using-coverd ... ge-4154529

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Snapdragon
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Joined: Tue Jan 29, 2013 5:26 pm

Re: College 529 fund question

Post by Snapdragon »

Thanks for sharing the info Bubba

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Fund Prices2022-08-18

FundPriceDayYTD
G $17.00 0.01% 1.56%
F $19.04 0.12% -8.83%
C $65.31 0.24% -9.23%
S $70.24 0.46% -15.82%
I $33.59 -0.29% -14.83%
L2065 $13.10 0.09% -11.96%
L2060 $13.10 0.09% -11.95%
L2055 $13.11 0.09% -11.94%
L2050 $26.96 0.08% -10.22%
L2045 $12.37 0.08% -9.53%
L2040 $45.43 0.07% -8.77%
L2035 $12.08 0.07% -7.94%
L2030 $40.50 0.06% -7.05%
L2025 $11.67 0.05% -4.74%
Linc $23.00 0.03% -2.07%

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