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: 266
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 Prices2022-08-05

FundPriceDayYTD
G $16.98 0.01% 1.45%
F $19.05 -1.07% -8.80%
C $63.14 -0.15% -12.24%
S $67.93 0.74% -18.59%
I $33.31 -0.76% -15.55%
L2065 $12.78 -0.24% -14.10%
L2060 $12.78 -0.24% -14.10%
L2055 $12.79 -0.24% -14.09%
L2050 $26.41 -0.27% -12.04%
L2045 $12.13 -0.27% -11.26%
L2040 $44.61 -0.25% -10.41%
L2035 $11.88 -0.24% -9.47%
L2030 $39.88 -0.21% -8.47%
L2025 $11.54 -0.16% -5.76%
Linc $22.85 -0.12% -2.72%

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