UKMustangFan Posted October 4, 2017 Share Posted October 4, 2017 Looking to open up a college fund/plan for the little guy and have started to research the pros and cons of the ESAs vs. 529 plans... Anyone have good or bad experiences with either? Recommendations or advice? Also, what financial institution should we go through? I know 529's are offered pretty much everywhere, but ESAs are not nearly as widespread. Link to comment Share on other sites More sharing options...
MentschTrachtGottLacht Posted October 4, 2017 Share Posted October 4, 2017 I have 529's for my kids, I will send you more info in a text. Link to comment Share on other sites More sharing options...
rjs4470 Posted October 4, 2017 Share Posted October 4, 2017 We did 529’s. Never really considered ESA’s as weren’t yet around back in 1996 when we set the first one up. ESA’s can be used for primary school, not just college, so if you are going the private school vs public school route, an ESA may be worth considering. ESA’s also have more investment options (which could be a good or bad thing). On the minus side, the max contribution amount for ESA’s is lower, only $2000/child/year. That’s a really big problem if there are multiple contributors to the account (think grandparents). That would have been a big problem for us as both sets of grandparents regularly contributed to the accounts. We did our 529’s through TIAA-CREF. I have no recollection as to why we chose them...we set the first one up over 20 years ago and my memory is foggy. I can tell you I was happy with performance and they were very easy to use. I’ll be tapping into the third one next year year when my youngest starts college. Link to comment Share on other sites More sharing options...
UKMustangFan Posted October 4, 2017 Author Share Posted October 4, 2017 We did 529’s. Never really considered ESA’s as weren’t yet around back in 1996 when we set the first one up. ESA’s can be used for primary school, not just college, so if you are going the private school vs public school route, an ESA may be worth considering. ESA’s also have more investment options (which could be a good or bad thing). On the minus side, the max contribution amount for ESA’s is lower, only $2000/child/year. That’s a really big problem if there are multiple contributors to the account (think grandparents). That would have been a big problem for us as both sets of grandparents regularly contributed to the accounts. We did our 529’s through TIAA-CREF. I have no recollection as to why we chose them...we set the first one up over 20 years ago and my memory is foggy. I can tell you I was happy with performance and they were very easy to use. I’ll be tapping into the third one next year year when my youngest starts college. Is it possible to have both for a child? I guess I'm thinking if you do an ESA and it maxes out, just contribute the rest to a 529? Link to comment Share on other sites More sharing options...
rjs4470 Posted October 4, 2017 Share Posted October 4, 2017 Is it possible to have both for a child? I guess I'm thinking if you do an ESA and it maxes out, just contribute the rest to a 529? I don’t see why not, but I’m not a financial advisor, so I can’t answer that with certainty. That would allow you to take advantage of the benefits of both. Link to comment Share on other sites More sharing options...
Randy Parker Posted October 4, 2017 Share Posted October 4, 2017 We started an ESA years ago and have kept it. No problems at all, but if you're wanting to invest more than $2k annually, the 529 is the way to go. Link to comment Share on other sites More sharing options...
rjs4470 Posted October 4, 2017 Share Posted October 4, 2017 By the way, starting a 529 when my daughter was 2 (and at birth for my sons) was one of the smartest and best things I’ve ever done financially. I did monthly contributions and in addition put larger chunks of money in whenever I could and had really nice accounts when the time for college came. My oldest son virtually got a free ride so I’m transferring his to my youngest as he’s likely going to end up at Bellarmine. My kids (and us) not needing to take loans to pay for college has taken a big load of potential stress off my plate, even though those monthly contributions hurt a little when they were young and we weren’t very well off. Link to comment Share on other sites More sharing options...
Randy Parker Posted October 4, 2017 Share Posted October 4, 2017 By the way, starting a 529 when my daughter was 2 (and at birth for my sons) was one of the smartest and best things I’ve ever done financially. I did monthly contributions and in addition put larger chunks of money in whenever I could and had really nice accounts when the time for college came. My oldest son virtually got a free ride so I’m transferring his to my youngest as he’s likely going to end up at Bellarmine. My kids (and us) not needing to take loans to pay for college has taken a big load of potential stress off my plate, even though those monthly contributions hurt a little when they were young and we weren’t very well off. Nicely done. :thumb: Link to comment Share on other sites More sharing options...
Beechwoodfan Posted October 4, 2017 Share Posted October 4, 2017 I don't know anything about ESA's, but we sent 3 kids to college on 529's with no problems. Link to comment Share on other sites More sharing options...
LIPTON BASH Posted October 4, 2017 Share Posted October 4, 2017 Pm me. Link to comment Share on other sites More sharing options...
Randy Parker Posted October 4, 2017 Share Posted October 4, 2017 I don't know anything about ESA's It's basically an Educational Roth IRA. There's a $2,000 annual contribution limit, but the growth is tax free. Link to comment Share on other sites More sharing options...
Voice of Reason Posted October 4, 2017 Share Posted October 4, 2017 Depending on the personal facts and situation, I also would consider funding a regular Roth IRA. Link to comment Share on other sites More sharing options...
Watusi Posted October 4, 2017 Share Posted October 4, 2017 Make sure you research the differences between the two. For example the custodial controls, the ability to transfer the funds to another family member or back to the parent, etc. 529's are a bit more flexible by my understanding. Link to comment Share on other sites More sharing options...
plantmanky Posted October 4, 2017 Share Posted October 4, 2017 Wife and I are going to be so behind on this when kids come along. Link to comment Share on other sites More sharing options...
rjs4470 Posted October 4, 2017 Share Posted October 4, 2017 Wife and I are going to be so behind on this when kids come along. It’s not really that hard. Set up automatic investments in an amount you can stomach and add a few $’s to it whenever you can. In reality, the key to affordable college is your child getting good grades and performing well on the ACT/SAT. I’ve got two in college now, and you of course know my youngest who will be heading to college next fall. I’m paying less than $2k a year for my oldest, and my middle kid is going to EKU for next to nothing, simply because they did very well in high school. My youngest is likely going to Bellarmine, and despite the $50k price tag, in reality, it’s going to cost less than $5k. The 529’s have paid for extras like food and other living expenses. Link to comment Share on other sites More sharing options...
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