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... contributions to a 529 account.

I have actively invested my 2 kids gifts to minors accounts (UTMA) for the past 10 years or so. Here are the numbers:

Account 1 Yr Return 3 Yr Return
Becky 20.18% 15.01%
Dan 17.54% 15.45%

My daughter is about to hit college age. She is currently a Junior in High School. My financial planner suggested that I fund a 529 account for each child to grow those savings tax-free.

However, when I downloaded the 529 Starter Kit from Fidelity, the Massachusetts U.Fund has limited investment choices, marginal returns, and high fees.

I am thinking that I may just fund a regular brokerage account (in my wife's and my name) that I can actively manage and pay the long-term capital gains taxes on those investments instead of the crappy 529.

Has anyone else done this research and come to the same conclusion? I'd appreciate any feedback on this.

Cheers!
'38Packard
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Has anyone else done this research and come to the same conclusion? I'd appreciate any feedback on this.

I didn't do a lot of research because I have 3 and my youngest headed off to college in the fall so we were already heading down a different path. I do feel that 529s are something of a boondoggle for the states and the management companies. I don't see much of a reason not to significantly raise the contribution limits and to get rid of the income limits for Coverdells so people could invest as they wish.

I am thinking that I may just fund a regular brokerage account (in my wife's and my name) that I can actively manage and pay the long-term capital gains taxes on those investments instead of the crappy 529.

A strategy to consider along with this is to gift the investments(up to the annual gifiting limits) to the kids as the money is needed for college and sell it out of their accounts at a likely to be lower capital gains rate.

I do have a 529 for my youngest because I can exclude contributions from my income for state income tax but it's not the major money. My state has changed managemetn firms almost annually so I'm not all that confident in anything except everyone's hand is in my pocket :)

rad

P.S. There's another post entirely if you expect to qualify for any need-based financial aid.
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