College 529 fund question

[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

[Bubba]

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.

[Scarfinger]

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

[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.

[Bubba]

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

[Snapdragon]

Thanks for sharing the info Bubba