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Thanx very much for the information, the links to more info, and hearing about the decisions you all made. I appreciate the time and effort you all made to post responses.
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I did find a "Paying for College" board in the Financial Planning group

I promise that if you post there, you will get a response.

Fuskie
Who would start out with the Clark Howard Guide to 529 College Savings Plans...

http://clark.com/education/clarks-529-plan-guide/

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I assume I'm going to have to spend a full afternoon reading up on these two plans before deciding on which to use for a 3 year-old and a one-year old?
Has anyone found any great advantage or dis-advantage using one or the other?


We went with the Coverdell for our kids. I liked that there was no limit to how I could invest it whereas the 529 plans that our state offered was highly conservative with investment options. It's tough to give more advice as I don't know what your state offers.

The important thing is saving and investing.

IP
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I assume I'm going to have to spend a full afternoon reading up on these two plans before deciding on which to use for a 3 year-old and a one-year old?
Has anyone found any great advantage or dis-advantage using one or the other?


Off the top of my head, there is a large difference in what type of account you can invest in:

529s have to be invested in a specific state's plan - it doesn't have to be your state's, and there are differences between what states offer, so you need to do your research
Coverdells can be invested at any brokerage that offers the account.

I would suggest starting the rest of your research, like differences in what the money can be spent on, when they have to be distributed by, how they can be transferred, etc. with IRS Pub 970 https://www.irs.gov/pub/irs-pdf/p970.pdf

AJ
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And don't forget that not all children will go to a college where the accumulated funds can be used and finally gain that tax benefit.

Investing in an ordinary taxable account is another option, and one that provides more options for using the funds down the road.

--Peter
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I liked that there was no limit to how I could invest it whereas the 529 plans that our state offered was highly conservative with investment options. It's tough to give more advice as I don't know what your state offers.

You can use any state's plan, if you find a state that has investment options that you prefer. If your state has income taxes, you probably won't get a tax break if you invest in another state's plan. But if the other state has significantly better investment options, or if your state doesn't have an income tax, then it may be worth it to invest in another state's plan.

AJ
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Something that I don't think has been mentioned but might be worth considering is the annual contribution limit. My understanding is that the Coverdell has a maximum contribution of $2,000 per year, whereas the 529 doesn't seem to have an annual contribution limit but may have total lifetime contribution limits that vary by state/plan:

https://www.savingforcollege.com/article/how-much-can-you-co...

529 plans do count against your annual gift limit of $15,000(?) to an individual, however.

The other point that I don't think was mentioned is that the Coverdell account is technically owned by the student, whereas a 529 plan account can be owned by a parent, grandparent, etc., with the student named as beneficiary. That could potentially matter when it comes to financial aid calculations, as colleges/universities apparently take a larger percentage of a student's assets than they do a parent's. Or at least, that's my understanding!

I went with 529 plans for each of my two children, and our state doesn't offer any tax breaks for using its plan, so I went with Nevada (because Vanguard administers their plan). I've been pleased thus far.

Good luck with your college saving!
dols22
long 529 plans
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You can use any state's plan, if you find a state that has investment options that you prefer. If your state has income taxes, you probably won't get a tax break if you invest in another state's plan. But if the other state has significantly better investment options, or if your state doesn't have an income tax, then it may be worth it to invest in another state's plan.

With regards to the OP, there isn't a state tax deduction in NC.

PSU
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First of all, are you planning to pay for college or are you hoping and/or possibly eligible for need- based financial aid ?

Would you use any money to pay for private education prior to college ?

The first thing I suggest is reading through - https://www.irs.gov/pub/irs-pdf/p970.pdf because neither the 529 nor the Coverdell work in a vacuum. There are other tax considerations as well.

Another resource I recommend is https://www.savingforcollege.com/

My youngest is 32 so only my younger two kids were eligible for any thing and my experience from way back then is unlikely to be useful.
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We chose 529 plans. The plans aren't owned by the children. As long as generation skipping isn't done, the beneficiary can be changed without any penalties. If one of the two don't go to college or received significant scholarships, the plan can be switched to the other one.

My state doesn't give a tax deduction for 529 plans. We chose an out of state plan. As another poster stated, Vanguard has a good 529 plan. We have a 529 through Fidelity. It is also a good plan and easier for us to manage.
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Yep I used 529 plans from my state there was a tax write off against state taxes saved me about $1,000 a year. Also what they can be spent on is very wide open and the beneficiaries are easily changed.

I needed two 529 plans because twins and it would have been hard to swap it back and forth. The lifetime limit was hundreds of thousands.

Kids, grandkids, nieces, nephews,even yourself. Tuition, room and board, books. Even with scholarships those side expenses add up. Mine allowed me some leeway how it was invested too.
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Thanx very much for the information, the links to more info, and hearing about the decisions you all made. I appreciate the time and effort you all made to post responses.
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