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I'm 44 years old and the proud father of a 7-week-old little girl, and I just started doing some preliminary research into 529 plans. From what I've been able to gather so far, since just about all of these state-sponsored plans use underlying mutual funds as their investment component, why shouldn't I just open a ROTH IRA and park the money there for 17, 18 years? Here's my reasoning:

1. I live in California and there is no state income tax credit for anyone living here and applying to an in-state program.

2. Most state programs actually have more costs associated with their programs - account opening, custodial, management, etc. - than the single expense ratio associated with a particular mutual fund (since I already have more than 50K in my other Vanguard IRAs, the $10 annual service fee would more than likely be waived).

3. College Savings Plans have restrictions on what the money can be used for ("qualified education expenses"). Not so the ROTH.

4. The money will be available for me to withdraw after I become 59 1/2, at which point my daughter will only be 15 and not yet ready for college. Point is, when she is ready, the money will be there for us to take out and use for whatever college expenses are needed, tax-free, without any restrictions.

5. I don't have to worry about "What if my child decides not to go to college?" and have to deal with the consequences of how to allocate all that accumulated money by then.

6. I will have control of the investments, and a greater selection to choose from at that.


Am I missing something here? I'm really interested to know why, given the points I've raised, it would still make more sense to invest in either a 529 or Coverdell Education plan? Any advice would be most appreciated.

Paul (fairly new member)
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