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Financial Planning / Paying For College


Subject:  Re: Coverdell contribution limit Date:  8/17/2012  9:41 AM
Author:  WotPeed Number:  7977 of 8482

Not sure what you mean by "use it" but definitely fully fund Roths(to your eligibility) for you and your wife first. It's like the Certs of account(2 purposes in one). If you have ample funds for retirement, using this for college is a possibility.

By "use it" I meant pull out some of the money that's been contributed to the Roth IRA to pay for some education expenses. As you say it depends on how well situated we are for retirement.

About Coverdells - this is my opinion having watched this from the beginning. It could easily go back to the lower limit. However, if you put $2K in this year and can only put $500 in going forward, there's really no harm no foul. The money is there. I always liked the flexibility in investing and I was happy with mine at Scottrade($500 min, I think).

It would really be a shame to have the limit revert to $500/yr. I guess it's better than nothing but I was very surprised when I heard this. With tuition costs climbing I can only imagine what a college education is going to cost in 18 years. $250,000 for a 4-year degree at a good state university? $500/yr, even invested aggressively, for 18 years is only going to end up being in the ballpark of $20k.

Depending on your state, you should check out the state tax advantages of a 529 plan as well.

I'm in California. I've just started reading up on the 529 plans.

Thanks for the input!

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