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- Thread starter SoapyCy
- Start date
Yes the $3188 is per taxpayer per kid on your Iowa return.
I don't have one (don't have a kid, well I have a step-daughter in college), but plenty of my tax clients have these.
I opened one right after our daughter was born. It's pretty straightforward. I set it up to automatically transfer funds each month. The sooner you start the better.
I would suggest these plans, but not really for tax savings reasons. Sure, the deduction on your Iowa return is better than nothing, but it's a fairly small amount of tax saved per dollar invested.
The benefit is in not having to pay income tax on the gains when it comes time to use it for college expenses.
The benefit is in not having to pay income tax on the gains when it comes time to use it for college expenses.
My wife and I have one for my daughter, opened it when she was born, and it is convenient. We just have X amount deducted out of our account each month and then we don't have to worry about it after that. Each year when Tax Season hits, we usually drop more in there.
I have a friend who is a financial planner for the company that bought out Aviva in Des Moines, and he said that the 529 was most beneficial to us. He compared the 529 to an IRA, Gerber, etc.
I have a friend who is a financial planner for the company that bought out Aviva in Des Moines, and he said that the 529 was most beneficial to us. He compared the 529 to an IRA, Gerber, etc.
My advice is don't wait. The sooner you invest, the longer and better you will have compounding working for you. If you wait, you may never get started!
I set up an account for each one of my kids when they were born. Have maxed out every year. My wife doesn't have as good of job, so contributes about 2/3 what I do. Our oldest, who will be 13 soon has almost 70k in her account. Starting early and compounding works!
I set up an account for each one of my kids when they were born. Have maxed out every year. My wife doesn't have as good of job, so contributes about 2/3 what I do. Our oldest, who will be 13 soon has almost 70k in her account. Starting early and compounding works!
We have one for all of our kids. The oldest kid is 25 and a grad student with a generous stipend and paid tuition so we zeroed his out before he got his undergrad degree. We have enough kids that it is pretty tough to contribute to each account but they are very convenient to use. Everyone should open one when they have a kid. We still had a little left in our second oldest kid's account and it came in handy this year when taking an online class was going to make his life a lot easier but he didn't want to pay the fee. He graduates in May and that wiped his account out too. Got another starting next year. He's gotten a lot of scholarships and works some but with the 529, told him to settle in his first year and not work until he gets used to college.
According to their website you can claim up to 4 accounts per married household: https://www.collegesavingsiowa.com/content/taxbenefits.html which is a total of $12,752 in deductions if you max out all 4 each year. We made the mistake of only opening 1 plan up and going over the max deduction, both our tax accountant and our financial advisor at the firm that manages our investments pointed this out last year and suggested both me and my wife have a 529 each and balance the amounts we contribute between the 2 to maximize the tax deductions.
The sooner the better for contributing to it so it grows over the years. The money you put in now should earn better over time than anything you start saving closer to college age. We've gotten in the habit now of putting our tax return straight into the 529 before we get tempted to spend it on something else. One you budget in your contributions like you would with mortgage, car, or other debt payments it won't even cross your mind about if you are putting enough away. Make it part of your spending lifestyle for it to priority to put so much toward the 529 and hopefully when your kids start going to college, figuring out how to pay for it won't be such a financial burden. Or just hope that your kids are really smart or athletic and get full ride scholarships which in that case the 529 turns into early retirement funds :smile:
The sooner the better for contributing to it so it grows over the years. The money you put in now should earn better over time than anything you start saving closer to college age. We've gotten in the habit now of putting our tax return straight into the 529 before we get tempted to spend it on something else. One you budget in your contributions like you would with mortgage, car, or other debt payments it won't even cross your mind about if you are putting enough away. Make it part of your spending lifestyle for it to priority to put so much toward the 529 and hopefully when your kids start going to college, figuring out how to pay for it won't be such a financial burden. Or just hope that your kids are really smart or athletic and get full ride scholarships which in that case the 529 turns into early retirement funds :smile:
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I always just go to the tax benefit max. I think you have until April 18 to contribute for 2015 tax year? If so do the max for that year and you can go ahead and start contributing for 2016 on April 19.
Please correct me if I'm off, I don't have one, but aren't you limited on what investments you can put the money into?
We have 8 of these accounts (the wife and I each have 1 for each of our 4 kids) all started at the birth of each child. They are great if you want to save money for your child's education as mentioned above. I believe you can take out money penalty free if your child gets a scholarship, as well.
Not really. I think they have a good selection of choice of investments with low cost.
That is correct. Open it now and put as much as you can in, keep doing it and you build up a nice little account. I did that when my kids were born, while I cannot pay for all their college, this will put a big dent in it.
thats what I kinda meant. They have a list of what is the approved investments. I couldn't just go find any mutual fund and call it a 529 can I?
you can, just would need to pay tax on any gains.
same also applies if you child joins the military
You can choose from their investment portfolio of funds based on risk assessment (agressive growht through bonds & money market) and/or have it reconfigure automatically over time on their age-based savings track.
Here is Iowa's website:
https://www.collegesavingsiowa.com/content/home.html