Are 529's Really the Best Way to Save for College?

[@stonecold9573]

One of the more legitimate questions. Way better than those callers who are like, “Dave, I make $250k but I’m still broke.”

[@rikstardy]

But he didn't answer the question!

[@tonypeters3320]

Yet he attacked her 🤣

[@Omni-King2099]

He pretty much called her stupid and rephrased her question to something he could answer.

[@surgeon2b]

Lol facts

[@malcorub]

Dave can be a real d*ck sometimes even to smart callers with good questions and not even realize it, thank goodness the sweet co host is there to level set things. LOL.
So in the scenario where she saves 200K in a 529 but the kid only uses 60K, how does the remaining 140K plus earnings get taxed?

[@perreira831]

As a father to a wonderful daughter no words can express of the joy I have seeing these 2 together.

[@drewchorlton342]

Trade school kid here saying my grandfather's 529 accounts he set up for me has benefitted me greatly.

[@lmac7633]

I started a 529 for my unborn children a year ago. Those fuckers better be grateful.

[@rs7458]

Is it too late for me to get into trades at 39? I was thinking about HVAC.

[@JacquelinePeters03]

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

[@lennoxmutterick6434]

Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks

[@JacquelinePeters03]

@@lennoxmutterick6434 However, if you do not have access to a professional like JUDITH ANN PEACE, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments

[@lennoxmutterick6434]

@@JacquelinePeters03 Oh please I’d love that. Thanks!

[@JacquelinePeters03]

@@lennoxmutterick6434 Judith Ann peace is her name

[@JacquelinePeters03]

Lookup with her name on the webpage.

[@vivalageegee]

Why is Dave always so condescending?! This lady had a legitimate question. Just answer the question and stop being rude!

[@MsSoulfulginger]

“You don’t have to worry about it today” I was shocked! I thought we were supposed to worry about these things early!

[@vivalageegee]

@@MsSoulfulginger exactly! You are. He’s just rude!

[@Kevintendo]

He’s not always condescending haha! You hear Papa Dave come out when someone needs him

[@donhill1825]

I didn't get the impression he was condescending to her at all(?) Is it a tone issue?

[@donhill1825]

@@MsSoulfulginger he means to literally not "worry". It isn't urgent yet, they have plenty of time. Just be intentional & contribute to the 529. There seems to be a group of people who go out of their way to intentionally misunderstand Dave. I don't get it.

[@0alejandromontes0]

This video needs to be updated. They can roll out all their money in their 529 to their 401k ROTH, (What a great gift!)

[@robertbuetti2354]

This is news to me. Can you provide a source/explanation?

[@BisquickTheBaboon]

I thought the limit was $35k that could be rolled over into an IRA?

[@bakedbombshell1694]

@@BisquickTheBaboonyup

[@godfathaofyo]

@@BisquickTheBaboon yes that was my understanding, can roll over the max contribution you've made each year, with a total rollover of $35k, into a Roth IRA

[@joshgeorge7]

The thing with the 529 is the trade school kid could always pay a penalty to use the money for non-education expenses, or just name the beneficiary as their own child or a niece or nephew if they are so inclined. A well-funded 529 can create a generational change in a family's educational legacy.

[@BlackandWhite92]

Depending on the state, however, in New York, you can use it as a qualified expense for elementary school and trade school without penalty

[@lferram1647]

I’m so glad someone asked this! Great insight.

[@ranger2316]

I have started a 529 plan for my four y.o. granddaughter. Besides leaving her a portion of anything left in my savings, I think it's the single best financial gift and leg up I can leave her. I am a strong believer that a college education, or a trade degree is vitally important. If she doesn't use it...OK, it's her decision.

[@ariv8585]

Same as you. We hope to have nearly $75k by the time he’s 18, knock on wood.

[@ranger2316]

@@ariv8585 Good on you! You're doing a good thing!

[@ranger2316]

@@chuckscott4661 Five ... but I started it when she was about one.

[@jwc3104]

I started a 529 as soon as my wife said "Honey I'm Pregnant" with my daughter.
My CPA told me that some people start 529 as soon as they get married.
I plant to CONTINUE investing in 529 EVEN AFTER my daughter graduates from college.
I'll give the 529 account to my daughter when she gives birth to my grandchild.

[@ranger2316]

@@jwc3104 Good on you. I think that's a wonderful gift/legacy to the next generation. Like I said, it's up to them what they make of it. I don't even need thanks, it's just the right thing to do! Have a great day!

[@ClutchTrick]

It was my votech diploma that paid off my 4 year degree. I now teach at my old vocational school and love that students leave with far less debt and great paying job offers at 19 years of age sometimes.

[@aurianfaridi4207]

You can also change the beneficiary of a 529 to another one of your children if there’s money left over or if they get a scholarship and don’t use the money. Any qualifying beneficiary.

[@steve1952]

In her scenario, just hold on to 529 and let it sit there and grow. If the child wants to eventually go back to school they can or if you want, transfer it to possible future grandkids to avoid paying penalty when withdrawing

[@anastasiao5512]

Dave failed this one. The mom's concern is valid - what if one kid decides to be an engineer, while another one has a calling to be a sales person or a real estate agent where the education will take a few months and a few hundred bucks? I'd say in this case it would be fair to just withdraw the money and pay the penalty and use the money for something else.

[@beautywinsfails8867]

I know. He should have explained how 529s work - you can actually transfer the funds to another family member if you don’t need to use up all the funds when it comes time for the child to attend higher education.

[@MoochnNique]

Right, he was kinda…. Mean. 😢

[@godfathaofyo]

he said the kids are 1 and 2 years old, they are too young to make that determination. there isn't enough money in the 529s to worry about that situation, when the balances hit $100k in a few years or, 10 years, when you get a better understanding of the kids potential trajectory, then it will be time to think of a better vehicles. As he said, most people aren't saving enough in 529s to worry about having money "leftover"

[@joepfeiler5911]

The issue is there is no reason for someone to go to college for the wrong reason. The 529 has tax penalty for removal for none college uses. That is why we did custodial mutual funds for our children. My son said he wanted to get his CDL and drive truck, so we paid $425 to help him get his Class A CDL . I think he is better off than a lot of the people I know driving truck after the got their four year degree and were not happy in their career. He was able to take the money from the custodial accout and put in an IRA (or could have used it for whatevere) where as we would have had a tax penalty for taking it out of a 529 for uses other than college

[@corilou5273]

This was more helpful than any of the video's I have been watching trying to answer the question you just did! Thank you!

[@joepfeiler5911]

@@corilou5273 Because the money was in a custodial account in my son's name, the income from the account went on his tax return when it was liquidated, and he was in a low tax bracket, so our family had tax savings. Another thing to be aware of is when the child attains the age of 18 or so, they could cash the account the parent would have no control over what they did with the funds. We also have another son and daughter who have used their fund for education.

[@elizabethheiland5632]

Did you need to get a financial advisor to get custodial mutual funds? And how is the interest similar to a 529?

[@joepfeiler5911]

@@elizabethheiland5632 I was a small bussiness owner and had been working with an agent that handled Insurance and IRA and other retirement plans. He set everything up for the accounts. These were mutuals funds that contained stock shares.

[@sethbender2863]

Even medically. My grandmother had heart surgery and was able to zoom with the doctors, show her the scans and everything online. The convenience is going to change the game in the future

[@huisitu4519]

One thing wasn’t talked about is the fact some 529 allows you to use the fund on “lower” education like pre school or private schools.

[@jzsbYT]

I did not know this, thank you!

[@godfathaofyo]

i believe recent changes to 529s allow usage for k-12

[@brianpitsilides5337]

I cash flowed my 4 year degree. Would have been better off had I just pursued my career directly out of high school. This is something I try to tell my children. If they choose to go to college, I will help them, but I tell them they will probably be better off starting a business on their own.

[@slidegirl6005]

They can always take a few business courses as needed, too, at a community college.

[@perotal]

Not everyone is cut out to be an entrepreneur

[@ludens1526]

Better off finding a decent job that pays well. Save an emergency fund and downpayment for a rental property.

[@vchafab]

I tell mine to join an union. Seriously, I have so much school debt but every single successful person I know (plus they make triple what I do) are union workers, all different trades.

[@theelephant2887]

All depends what career path they target. MD, lawyer, engineering, CPA,... no way around it

[@noopsspoon5250]

5:33 "If they (schools) don't start meeting, nobody's going. They're going to lose all their customers." -Dave 9/20
I never thought I would hear this reference when talking about America education. It makes me sad for my country.

[@philipmurray5380]

Did I miss something, or was the caller concerned about what would happen if her child chose trade school INSTEAD of college? Seems like a valid concern to me.

[@LG123ABC]

@@JDawgstwothousand I think she was worried that there would be money left over after trade school. Also, it's "moot" point, not "mute" point. Sorry, but that's a pet peeve of mine.

[@Thurgor_Supreme]

I've made up my mind on this. Anything that's not used for education loses the tax benefits and has a 10% penalty on it's growth. That being said, I'm going to tell my kids they can use the excess on a down payment for a house, and I'll just shrug my shoulders at the penalty.

[@angryarkie1642]

Thurgor Supreme probably the best option.

[@jbr2991]

@@LG123ABC My daughter is an English teacher. She has a tee-shirt that reads, "I'm silently correcting your grammar."
😂😂😂

[@tonypeters3320]

Exactly! Still got hammered by Dave.

[@Lets_DoWhatWeWant]

College is overrated 🙄, I am making my kids value their education by working for it. Their is so much information available for free. A book cost $250 and a free RUclips video can explain the knowledge within the book.

[@BlackMarq20]

It is, but the problem is if they end up working for a company and not themselves, many companies require a 4 yr degree. It’s a rip off for many fields

[@wowerz82]

Thats dumb. That delays the college education significantly. There are books that are free but theres still tuition and supplies to pay for... plus the added stress to it.

[@jsan4108]

If you want to go to a university, definitely check out western governors university. Tuition is not high compared to other universities and they have been built to be online university. I personally enjoy WGU.

[@jsan4108]

Beyond Tribalism i am a computer science student, however, I’m already used to online. And others affected by rona, their university is having such a hard time with the transition. WGU is already a solid platform for online.

[@chaddowning2492]

Love WGU, good tip.

[@jsan4108]

Chad Downing and the great this is they are competency based.

[@twilde3754]

529 was the best for our kiddo!! We put 2400 a year for 10 years -- it was worth it!!!

[@jzsbYT]

How much did it grow too?

[@deboman81]

That’s what I would like to know.

[@godfathaofyo]

@@jzsbYT same it would've grown if you put in a basic brokerage account, you just don't pay taxes on the gains

[@angeliemorano]

We just have one 529 account that our daughter is the beneficiary. If she decides not to go to school or doesn’t use up the money, we can change the beneficiaries to go to our grandkids or nieces/nephews.

[@iGimmie]

I like how Rachel points out that these schools are charging these insane prices, even though everything transitioned to online because that's what happened to me. Ontop of the new requirement to HAVE A COMPUTER WITH A CAM. My paper and pencil isn't enough now.

[@johnnyg507]

The paper and pencil have been on the way out for several years. In many elementary schools, they aren't even teaching cursive writing anymore. Anymore, you need to know how to sign your name for legal docs, etc, but that about all the *actual* writing most kids do... other than maybe a quick thank you note or postcard to family. Just like textbooks... professors have them on their "required materials for class" list, but everyone we have talked to about it says, "First thing, don't buy the books until you go to class; you most likely won't need them, and sometimes you can find them online for free".

[@YcMdattGUY]

I’m mad because I tried to take a class I got a D in online at my university ( I moved 3 hours away) and they said it was impossible because it requires in person learning and 1 month later they’re doing it through zoom. Mannnn.

[@FredDogification]

In 20 years you might get your degree from Amazon.

[@cepheid4288]

Truth

[@samtamborello601]

🤣🤣😂😂 nice one.

[@jacobshaw2991]

He says most people don’t get enough into their 529 to pay for their kids school and then turns around and tells the kid they can cash flow their college 🤔 if their two adult parents can’t save enough over 18 years to pay for college how can the kid afford to cash flow college on the spot.

[@TeKnoVKNG23]

The "kid" has to get a job and work during school. It's doable if you don't go to the expensive big name university or private school.

[@Excalibur2]

@@TeKnoVKNG23 not really. Jacob makes a great point that if the dual income, settled parents can't manage to cover it in 18 years, it really is unreasonable to expect a kid to cash flow it working part time.

[@itsMAYgical]

Because he expects the college student to be living at home with parents with minimal bills and using money from working to cash flow school.

[@Excalibur2]

@@itsMAYgical not realistic. He remembers a time where a min wage job paid for school in full with money to spare. If he wasn't a dinosaur he'd be more with it.

[@Ethernet480]

The other constraint with cash flowing college that isn’t discussed is the fact that sometimes you have to complete coursework within a certain period of time in order to obtain your degree. You can’t just cobble together classes while you pay for each one

[@MR.B1004.]

Correct me if I'm wrong but I think she was asking if one of the kids decided to do something else beside education what can she invest in besides a 529 that can be used for education or something else. I think Dave Ramsey missed the point on this one.

[@dawnyoung9896]

Ya. I've wondered that. What if they join the military and do not need the money for college at all- are they taxed? Fined? How do they get their money out?

[@CarDr.]

I believe Dave stated that if it doesn’t get used, you can roll it into a mutual fund.

[@MR.B1004.]

@@CarDr. Good luck trying to do that with a 529.

[@mr.clapyourcheeks8496]

Facts or they can go to an apprentice school which is free so no cost at all.

[@MR.B1004.]

@@mr.clapyourcheeks8496 The woman was asking what could she invest in if one of her children decide not to go to College. She specifically stated one if I wanted the money to be used for a down payment for a house. You can not transfer a 529 Plan into a Mutual fund.529 Plan must be used for Schooling it can't be transferred into a retirement fund.Basically she wants to know is there another option besides a 529 Plan that can be used for college are something else.Listening and comprehension is very important.

[@Thurgor_Supreme]

Yes, you can "over-invest" in a 529. If you don't use it for education, then you have to pay a 10% penalty on any of the interest it's made, as well as paying the taxes that were previously waived. So basically, you have to keep an eye on your state's tuition costs and kind of just dial it in. If your kid winds up going to a cheap trade school or something, then they can use the excess on a down payment for their house and the 10% penalty is just an "oh well" type of thing. Regardless, it's still better than starting their adult life with a mountain of debt.

[@elizabethheiland5632]

What taxes do you pay that were previously waved? That sounds scary. I thought it was when you cash it out, let's say it makes your income go up a bracket, you pay for the new bracket

[@justanotherweirdo11]

​@@elizabethheiland5632 I believe the 529 plan has tax free withdrawals for education expenses. The withdrawals wouldn't be tax free for non education expenses.

[@barcenas73]

I currently have one for my son. It should not be called an investment plan. Should be called a losing plan or a 529 grift.

[@mattcrouch9348]

My son started making decent part time money about two years ago, at 16. I told him I would match anything he put into a 529. He's now 1 semester into his debt free degree. Bam!

[@lj5781]

Very cool!

[@williammuff5485]

That's awesome!

[@razmiddle9410]

It's honest of him to say that he sees the value of a 4-year degree -- what people in his position of influence often do is talk through one side of their mouth about how a 4-year degree is stupid and how young people should go to vocational school or start working right away, while on the other side of their mouth tell their own children and grandchildren about how important a 4-year degree is and carefully save up to pay for it, creating even more of a class difference.

[@ryanohning7291]

No. College has nothing to do with good financial literacy. He knows it. Anyone who has that literacy knows it. I know personally quite a few college graduates that are awful with money.

[@dr.ellieparsa7445]

He didn't answer her question! She asked if I have more in 529 than paying for education, can I use the rest for a property down payment?
The answer is no and yes! You have to pay the tax of that remaining money plus 10% of penalty in order to use it for anything rather than education.

[@affiesamari7874]

No idea why Dave didn't mention it, but if you do in fact have leftover money in a 529 after the beneficiary graduates college, you can do the following with the leftover funds without penalty:
- Use it towards post-graduate education if the beneficiary decides to pursue a Masters, PhD, etc.
- Change the beneficiary so that the new beneficiary can ise the funds (you can only do this once per year, but multiple accounts can have the same beneficiary)
- Transfer the funds from a 529 to a Roth IRA
There's basically no going wrong by putting "too much" into a 529.

[@MD-pz3cn]

This was recorded years ago, before Secure 2.0 made it possible to roll 529 funds into Roth accounts.

[@Michael-ft9pm]

I rather just cash flow semester by semester. Don't buy meal plans or live on campus.

[@angryarkie1642]

Unfortunately, some universities and colleges require freshmen and even sophomores to stay on campus.

[@Michael-ft9pm]

@@angryarkie1642 This is why you do a community college for two years, so you start a 4 year school as a junior.

[@angryarkie1642]

Beyond Tribalism good job.

[@BusArch42]

On campus is a rip-off. I also did community college and transferred. On campus was 33% more for a shared room

[@CarolBennettGA]

Yep. Both colleges I went to were local. I commuted from home and then went to work after. Had two small scholarships and yes two loans. But I was also making payments throughout my time there. I did the math and the cost of one semester on campus equaled four years of gas/maintenance on my car/food/books/classes. When I graduated with my B.A. I owed about $13k. That balance was paid off in a year.

[@WA4OSH]

I saved for both of my kids using a 549 plan since they were little. My girl went on to earn a BS physics, chemistry and computer science minor. My son on the other hand, decided he wants to learning a trade with on the job training. He does not need a college degree for that trade Eg. Electrician. He has over 50K in his 529. Currently with the laws the way that they are written, if he want to start his own company with the trade he's learned, he will get penalized 10% to get at those funds as seed capital.

[@ariv8585]

Only the earnings portion of a non-qualified 529 plan distribution is subject to a 10% withdrawal penalty.

[@ariv8585]

Beyond Tribalism No, student loans do not qualify and you’ll end up paying penalty.

[@joeb1522]

10% penalty on the earnings plus taxed at ordinary rates, which range from 10% to 37%.

[@karenhardie1132]

What about cousins, nieces, nephews. It can be transferred to another family member easily.

[@gd2561]

Looking set up a 529 for my kids today but having trouble with Vanguards webpage. Gonna have to call on Monday. Can’t wait!!

[@random-nz7dy]

The biggest thing I am hoping for as far as public education goes is that people continue to realize that going to a prestigious University basically means nothing as compared to going to an affordable in State University.
And that more people will continue to realize that getting a degree does not equal getting a good-paying job.
It comes down to whether or not you are going to learn skills that are applicable in the marketplace.
A degree is great but too many people get degrees that they never use and they were told that simply a degree = six figure job. Then they find out that the people making that kind of money with that degree are in the

[@302ec]

College is going to be different in 10 years. For example, if you want to be a software engineer you don't need college. You can take a few courses online to learn how to write code. If you want to be a nurse, you still would need college. So it depends on your major

[@302ec]

@C B they were 30 years off. The landscape is changing. I work with several software engineers who don't have college degrees but they are rockstars when it comes to software engineering.

[@BernadetteZayasLore9]

No! Virtual Learning is already HERE!

[@maureen8745]

All high schools should be vo-tech then graduates can decide if they want to futher education in that field

[@gd2561]

What is vo tech?

[@Bufs23]

Vo tech?

[@soonermagic24]

We decided just to save and invest on our own. 529 plan is garbage

[@brroookkeee]

Why do you feel it isn’t good? Just wondering because my step mom and dad just set one up for my 4 year old son

[@soonermagic24]

I set one up two weeks ago. We deciddd not to go forward. I don’t like the idea of being in another government ran savings account. I feel it’s a raw deal not having control over our money. If you don’t use it in school, you can in fact use it for another child without penalty. But what if both kids don’t go? It’s just like putting money in a mutual fund yourself. You’ll always pay taxes. Might as well control your own money

[@brroookkeee]

soonermagic24 Makes sense! I’m worried that if I put in for my son and he decides not to go to college, we will be penalized so we should just save in our own account and not touch it

[@soonermagic24]

Brooke Loffredo having said that, it’s still better than doing nothing. we kicked the idea around for months. I worried about the same thing. Also, you can use the money for private school as well, if that’s something.

[@SwimmingintheDeep]

@@soonermagic24 it grows tax free! It's not the same.

[@venuswealth6]

Having excess money for kids college is better than getting into debt for college.

[@aolvaar8792]

The largest university in the USA advertises "An Online degree indistinguishable from a brick and mortar degree"

[@too-da-loo]

The cost of a normal 4 year college is beyond a reasonable price. $120,000 min. In 17 years? either the entire system will crash or it will be $250k. I wonder if it better to lump all the contribution into a mutual fund and then split it 3 ways later.

[@rapper5933]

Another wrench in this: some careers can now be learned entirely online. IT and developers.. you don't NEED a college education (although it helps and can be used when moving up in a company). How many other careers will be changed by app/video learning, from places like Udemy, Coursera, etc? And that's not just speaking on today.. but what career learning will be like in 15-20 years.

[@williammuff5485]

I mean... 100k could be too much to pay for education. Depending on the path they take. You can go to pretty decent schools for ~15k a year (not including housing). Idk about you but id hate to have an extra 40k in a 529 that I couldn't use without massive penalty.

[@RichardWalls]

Not a fan of 529. You'd have to be able to forecast what you'll be paying on education in the future, where if you overinvest relative to education costs, then you're stuck paying capital gains in addition to penalties for pulling out for non education purposes.
Better off using a standard investment account.

[@joeb1522]

I agree. The kid might not go to college. If someone has several kids, then I suppose to put in a small amount you know will get used for sure.

[@Thurgor_Supreme]

You're not better off at all. You have to pay taxes on a "standard investment account" anyways. Just keep an eye on tuition costs and dial it in as best as you can. I'd rather gamble with the penalty than have guaranteed taxes for 16 years worth of investments.

[@bassjasinski]

Many states allow 529 contribution deductions when filing state income taxes.

[@joeb1522]

@@Thurgor_Supreme The taxes on a standard account are typically capital gains (or qualified dividend) rates of 15% (for most taxpayers). If you pull money from a 529, the earnings are taxed at ordinary rates of 35% plus a 10% penalty. So the tax rate is 15% in a taxable account or 0% in a 529 if used for education or 45% if not. The difference between 15% and 45% is pretty significant and not worth this risk (for me) and not worth the limited flexibility of a 529.

[@joeb1522]

@@bassjasinski Agree. My state allows it, up to 4,000 deduction each year I recall. But the tax rate in my state is only 3% so the state benefit is pretty immaterial. But still a really good thing to consider. Some states have tax rates north of 10%.

[@Lnormile]

Dave doesn't really answer the question here, does he. She asked whether having more money than the beneficiary needs in the 529 would be a problem that she should try to avoid, and his answer is basically "Well most people don't have that problem so don't worry about it."

[@kashfortheking]

I would do a custodial account in the event the child chooses not to go to college.

[@tonypeters3320]

Bingo!

[@rmoreno1826]

Thats what I did too.

[@lastpolarbearcub]

529 accounts can be applied to non college education of any kind, and is tax advantaged unlike a custodial account

[@tonypeters3320]

@@lastpolarbearcub it can be great, BUT what happens if your child doesn't want to go to college then what?

[@kashfortheking]

@@lastpolarbearcub the key word there is education. Custodial can be used for a house later on.

[@sheenawinfrey3133]

Totally agree with Dave.... people have got to get over the fear and essentially get back to normal. Life has got to go on people!

[@edog8142]

Send your kid to the military, no student loan debt, you get paid while you train

[@BryceJohnson88]

That's what I did!

[@n.g.1577]

"I don't know anything" is code language for someone that has a superiority complex over the very people that he's getting money from. Unreal! Chill out Dave, and stop being so condescending towards people that look up to you.

[@1.5Koreans0.5American]

Does anyone regret going to college? I’m just curious

[@redwall1521]

I would, but my current (and first) job required me to have a degree. If it didn't, I would definitely say so.

[@Lauu_kzallaz]

I went for one year and dropped out so I definitely regret it! I’m glad I only went to a community college where tuition was cheap

[@topcheese2889]

I did

[@olivias2836]

I do. It was totally unnecessary for me. I never used my bachelors degree, I ended up using my esthetician’s license to open my own Spa business. I could have skipped the degree and only done my esthetician’s license program, but I was unsure of what I actually wanted to do. I recommend working and not studying period until you have no doubts about what you actually want to do.

[@eddieblake097]

i should have just done coding bootcamps or cyber security bootcamps along with comptia certs.

[@BunniesBuu]

What he’s saying is not true.. people invest way too much everyday and end up having to transfer the funds over to another beneficiary or take out a non qualified withdrawal. I know someone who works for 529 plans. She asked a great question!!!

[@Somenite]

If they don't use the money for education, I believe they can roll it into an IRA with no penalty and the extra can fund their retirement.
As far as 529s go, I did that for my kids and my experience has been that I probably could have made out better taking a different approach because when filling out financial aid paperwork the money in a 529 is accounted for so does impact your overall qualification for aid. I know someone making more money than me that worked with a financial advisor when their kids were young and long before they entered college and they strategically planned for it by putting money in assets that weren't accounted for in the normal FASFA form such as upsizing home to bury money in equity as well as retirement plans. I don't know all the ins and outs but from my experience the government and schools basically reward you for looking poor on paper so I'm thinking I would have been better off capping things like Roth IRA contributions every year instead of putting my kids 529 plans at the front of the line and then getting zero aid when they started school.

[@arij1129]

My kid had enough in his 529 to pay for college. He went to a public university within our state.

[@marcus3457]

I would add a third thing that is changing how people look at higher ed. The professors have gotten weirder and weirder, and with social media more people can see the weirdness than ever before, and it bothers them.

[@superblump87]

You both sound uneducated.

[@angryarkie1642]

Nate you beat me to this comment.

[@marcus3457]

I love the drive-by commenters. No curiosity as to why the initial comment was made, no articulation on their part, and generally rude.

[@angryarkie1642]

Marcus Christopher says the person who dropped the blanket statement that professors are weird...

[@Joelthelobo]

They could also do a coverdell depending how much money they were going to put annually and be aggressive in their mutual fund option.

[@robloxvids2233]

I think the Coverdell ESA has a low annual limit though. Very low. The 529 I don't think has a contribution limit.

[@clumpkin1012]

In twenty years college will be free unless you have money available in your name a.k.a. a 529 from your parents. No 529 for my kids. Will sell assets as necessary to cover short fall if they decide to go.

[@DrumNBassKidd1]

I love the fact and I thank God for the day I found this channel/Podcast

[@pooh19818119]

There may be a benefit in 4yr degree, but there is definitely a benefit in a Trade School.

[@JR-wu8gf]

Yup most of my cousins went to trade school to become machinist so I followed but I got tired of the standard rate of 24-29 bucks an hour so I went back to school.

[@pooh19818119]

@@JR-wu8gf I understand, but there will always be a great need for blue collar workers because no wants the job

[@JR-wu8gf]

@@pooh19818119 very true

[@TheMinesweeps]

Not the best answer by Dave. He can’t just assume that she isn’t going to overfund it just because not many people do. What happened to gazelle intensity?
Be purposeful with your money. 529s that are used for something other than qualified education expenses will charge both federal income taxes and a 10% penalty on the earnings.

[@kaitlyndemersramos4396]

Where is the best place to invest in for a 529? There are so many options. A local bank? Fidelity?

[@dawnyoung9896]

I disagree with Dave. I definitely don't have a goal of 4 year degrees for all my kids , (or grandkids). College is like size 7 pants. Some people do well with them. Others need a size 14, 12, 10, 8, 9, 4, 5 etc 5. Most people need a size other than 8. Many jobs are requiring over education. Take kindergarten teachers being required to go to four years of college pass a teaching test, and then continue on to get their masters it's ridiculous any young adult that loves children and has the teaching as a natural skill coul learn to be a kindergarten teacher in way under a year of specialized teacher training---tgey don't need college! One room school houses were not run by college graduates, those were 16 yr olds with highschool deplomasvandva "teacher's licence" And a dentist does not need to take 4 years of language arts. What they should do is just focus on what you really need then it wouldn't take so much time and it wouldn't cost so much money. We all wind up paying for all that waste, as consumers.

[@benb7727]

The better question is “is college even worth it?”

[@hamzaqaffaf7433]

To be honest, the answer is NO. Like today whatever universities offer is available online for free, or for just a small fee. But the issue is that universities offer companies an assurance, what you're mainly buying at university isn't really knowledge, but rather a piece of paper that tells the employer that this person does indeed have that knowledge. Well, that's just my opinion.

[@musique1o1]

The answer is yes. I've hired people on my team and if they had a college degree they would automatically be offered more money by the company I work for. Additionally, my dad in law is about 25 years older than me and only now makes about what I make at 30, I have an MBA he doesn't have a college degree. So the answer is yes, but make sure you know what options you have with your degree.

[@betterhomesnc2437]

No.

[@lowercherty]

Would it be dumb to do a Roth IRA for yourself instead? Especially if you will be over 591/2 when the kid starts college or trade school. Same tax advantages.

[@DaleSteadman]

That is what we did for our twins, the one benefit that you miss out on with the 529 is it freezes collage tuition.

[@lowercherty]

How many Gender Studies and Art History degrees do we need? The Philosophy companies haven't been hiring in years.
College should have a paycheck somewhere at the end.

[@BASHMAN9t5]

It does for the schools

[@coldsoup8958]

"That's good because they just opened that big philosophy factory in Green Bay."
-Eric Forman, That 70s Show

[@kaylatrausch1394]

What happens if you get a 529 then your student gets a full ride scholarship?

[@davidsurfacemusic]

From what I've read, you can withdraw an amount equal to the amount of the scholarship without penalty.

[@disneydad2514]

Remember a 529 will never outperform QQQ

[@elucia12]

this should be edited, unused 529 funds can be rolled into IRAs...

[@rickrowld]

Dave you didn’t answer her question. What do you do with extra capital that isn’t used in a 529?

[@abdallah8686]

he answered, once you get above a large number put it in a mutual fund and hold on to it until they need it

[@MAMP]

Here's a question. What is stopping 529 plans from being destroyed by inflation over the course of 18 years?

[@chrisventura1881]

Why if the child doesn't use all the money for education they can't use rest? What happens to the rest that was saved?

[@188jan]

Got 529 plan and it’s enough for my college, master n post master

[@americanmade36merica99]

Education is great, however colleges jacking up the rates all TAX FREE for the college's is crazy. It's getting to be just as bad as the healthcare system, as well as the whole insurance industry.

[@dandelion1598]

Kids need to get good grades & excel to be successful to attempt college. I'm not saving our money for an attempt at college. My rule: go to college, get loans, upon graduation I will pay for completion. If child quits, fails, loan is on them.

[@steelgirl6566]

My husband and I have made a similar discussion. We feel our kids need to be invested in wanting to further their education that way no wasting of their time or our hard earned money. Study hard apply for scholarships, work studies, and work during summers and 10 to 15 hrs. per week while in school. We have a modest set amount to give per child per semester. (Our kids are only 2 yrs apart so two years of the 6 will be double the tuition) If they have a shortfall they can get a student loan. Upon graduation my hubby and I will reward them with an amount to pay down their loans if they have any. Also they were told to pay the interest while in school so it doesn't accumulate. What we felt was most important was that we also had an all cards on the table discussion on the reality of budget and cost with our kids so they were realistic in choosing schools. One is a now acollege sophomore (no loans yet) and the other is a high school senior. We also have a 4 yr. old so we will be repeating this process again in 10 years or so. Have those talks early before high school. Good luck to all the other parents out their. Btw we have a friend that said when their child graduated from college he screamed and jumped up and down for two reasons. One of course he was proud of his daughter's accomplishment, but he was also jumping for joy that the hemorrhaging of his bank account was finally going to stop it was like losing a limb. Lol! Such a true statement.

[@jordanaubrey-realestateinv334]

College is a scam at least I got ripped off for sure.

[@RA-uq8hf]

Thats right students are consumers

[@rajshah5022]

Put it in VTI and buy every month.

[@mimosa9188]

Go to public school only !!!

[@nemeanlioness]

my kids are back in school. everything is fine. knock on wood. think there is too much unjustified fear.

[@ScottDreyfus]

What happens is college is free and you have 100k in a 529

[@lmac7633]

Just because college is free doesn’t mean, room and board is free. Rent, utilities, food, transportation still costs money than you can use a 529 for.
You can also use a 529 for textbooks, laptops, and other educational materials.

[@ScottDreyfus]

@@lmac7633 there is point where clients can end up with too much money. I hate to see the fees pressed upon people because they were unsure about what they actually invested in. I am shocked that people with set money on fire screaming Yolo before they even did a simple scrap of research

[@DiamondEdwards]

The rules of the 529 can change at any time. Tax Cut and Jobs Act of 2017 and SECURE Act 2019 both saw major changes to how funds in a 529 can be used. I'm not worried as the 529 will change with the times.

[@aliciahamiltonh2o]

I'm wondering...if you contributed more to the oldest child and less to the youngest then you would be able to fully fund that child older child's education first (regardless of university or trade or vocational school) then once you see what is remaining in the 529 account you could change the beneficiary on that account to "roll" whatever is the remaining to the next oldest child...and so on. Just curious if something like this would work.

[@markyazurin6304]

Yes it would work and you'd be able to do that

[@itchyisvegeta]

So here is a question that I am still not clear on for 529s. If I invest in my kid's 529 where it grows to $500,000 when he finishes highschool, and all of his college only costs $100,000, what happens to the remaining $400,000? Does it go away, or can it simply be cashed out with a tax bill, or is it even cashed out with a tax bill and penalty bill like a Roth IRA before 59 years old?

[@Goindians94]

You can take it out with a fair tax penalty. If you start getting to the point that it could be more in 529 than college would cost its time to put in Roth IRA, assuming the child is old enough to be “earning” the money put in their name. With the Roth I think you can pull out any amount you put in after 5 years (not interest earned) tax free without having to wait for retirement age.

[@Goindians94]

Taxed 10% on any interest earned in 529 plus taxed on the original amount that was deferred

[@itchyisvegeta]

@@Goindians94 Ok cool. The scenario I am planning is when I have a kid or kids, having them do chores and basic stuff to earn money as a form of allowance. But any money they earn they have to save 15%, which I hope carries on when they get real jobs. That 15% then would go to their 529, in which I would likely pay them a little generously for the chores, or come up with a match system where I contribute as well.
My theory and hope is when the kid turns 18 and goes to college or a trade school, they will be more careful in how they spend the money on education since they literally worked for it their entire life up to that point and are in a sense paying for their own college. But there is also the scenario that they suddenly choose not to go to college, and instead go military or even study at home to be some kind of entrepreneur. In this scenario it's good to know that all that 529 money, minus fair tax penalty and whatever else, could still be used for if they buy a home or whatever.

[@karenhardie1132]

If there is extra money in there it is easily transferable to another family member. Cousins, nieces, nephews, grandkids.

[@turnovertheleaf5505]

I am on disability and cannot grow a 529 (no "earned income"). What should I do instead?

[@AdamNYgoomba]

Good question

[@epauloconnor]

My question is... is there a penalty to pulling the money out after schooling is done, to use towards something else?

[@nicogorbal5787]

Yes there is

[@Chris-dr4bl]

College has gotten out of control because loans are too easy to get and they turned into money machines too. The loans get out of control because of their outrageous interest rates and compounding approach. It all gets out of control when people take out way more loan than what their degree's income potential is.

[@jeffreystanley4991]

Science education will never work online

[@johnnyd614]

And what if that kid decides not to go to college?? It sits wasted. Why not a Roth in conjunction?

[@dallasrichards9309]

Where do you recommend starting a 529? Like a bank or somewhere else?

[@nas0075]

Would this be a valid option if my daughter decides to study overseas? she wants to go to college in Europe. Would it still be tax free?

[@DiamondEdwards]

Depends on the school in Europe. From IRS Pub 970 - An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in a student aid program administered by the U.S. Department of Education.

[@blueice3124]

There's penalties if the remainder isn't used for educational purposes Dave, come on now you should know this

[@fernandomagana2167]

Thank you for this video. It was very informational. Suppose I live in California where there are no tax benefits for contributing to a 529, and I have multiple kids close in age, would it make sense to contribute to a single account or have separate accounts? Furthermore, would I be able to transfer a partial amount to another account if my second child decides to go to college, while my first child is already attending college?

[@DiamondEdwards]

Separate accounts as only one person can be named the beneficiary.

[@fernandomagana2167]

@@DiamondEdwards thank you. If I have multiple accounts, can I do partial fund transfers?

[@DiamondEdwards]

@@fernandomagana2167 yes you can roll all or some to another 529 or change the beneficiary. If you opt for the prepaid option instead of the saving plan you may have limited options. Each plan is different so read the fine print before you commit!

[@carlosr6597]

The lady has a good question, and Dave won't answer it. There's lots of other places to put your money beside 529 plan.

[@peterjanis2455]

College is such bull unless you’re doing stem

[@slidegirl6005]

Liberal arts college is, but technical/trade school is often really helpful

[@angryarkie1642]

I did liberal arts and I am now in the top 20% of earners. The programs aren’t the problem.. it’s the cost and then how the grad uses the education.

[@jimmiemacd3603]

What happens if you have way to much in your 529 and you don’t need it all? Isn’t it your money regardless?

[@louib716]

I don't think you have to use A529 for education expenses. The one that was available to me I took out to pay for living expenses

[@delismell]

Roth ira/401k is so much more versatile.

[@mountaincactus2573]

You can now in 2024 rollover up to $35k into a Roth IRA with certain rules