College Savings for child

Submitted by Zachariah Hammel on Wed, 2018-05-02 18:20

I have a client and her daughter is 9 years old, we were looking at cash value life ins. but at her age and the amount of money she was available to put away before college, she wasnt sold on it. What other vehicles out there might be a good avenue to look at for college savings plan other than life ins and a 529 plan???

Thanks



Submitted by Bruce Steiner on Wed, 2018-05-02 20:45

Why cash value life insurance?

Submitted by William Tuttle on Thu, 2018-05-03 03:05

Also, why not a 529 plan?

Submitted by Brent Washam on Fri, 2018-11-09 15:18

I’ve heard Ed say that basis from retirement accounts is available for college savings, presenting a much more flexible way of saving for college than a 529.  Can’t find info on the web site about this.

Submitted by Alan - IRA critic on Fri, 2018-11-09 17:01

You get a deduction for the 529 contribution, you don’t for IRA basis, either TIRA or Roth.  And you cannot withdraw basis by itself from a TIRA, only from a Roth IRA. The main difference is the deduction for HSA contributions.

Submitted by David Mertz on Fri, 2018-11-09 17:25

  • Ed’s statement was likely referring to Roth IRA contributions which can be distributed anytime tax and penalty free.  To be eligible to contribute to a Roth IRA you must meet the compensation and MAGI requirements.
  • Any deduction available for a 529 contribution is a state tax deduction, not a federal tax deduction.

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