Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some
continued education for some credentials I maintain and it occurred to me that
we all could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Hey PCN, this article is
not designed to be preachy but allow me to share that we have 11 grandchildren
and we know that one day college (or trade school) is going to be a big
financial drag on them and their families.
To help with this future cost, a 529 plan is really a neat way to set
aside some monies now which can be a BIG help later. So all 11 of those little Sztanyo’s have a
529 and we contribute regularly to them.
Now to be honest, we are not “fully” funding their future expenses. In fact our contributions are rather
modest. But that said, a little put away
today can become a big deal down the road.
As we approach the year end I will run a number of articles that can
help with the annual “year in review” of your own financial plan. Today, this article is not for you
specifically, rather it is for your legacy. Those wonderful youngens called
grandkids, could live out their lives with a wonderful feeling of gratitude to
you. Most states offer fantastic plans,
however some are better than others, and remember you are not restricted to the
state in which you live to set this up. Take a look and give this some thought.
How To Set Up A College
Fund For Your Grandchildren, Even If They Aren't Born Yet
If your kids are all grown up, you
may be starting to think about grandchildren. With the cost of college continuing
to skyrocket, if you have the means, you may be trying to figure out
the best way to contribute to the cost of your grandchildren’s educations.
Odds are your children aren’t going to have kids all at the same time. Yet
the last thing you want is to fund an education account for the first
grandchild while you’re working (and have plenty of cash flow) and have others
come along later when you are retired and living off your nest egg (and money
is tight).You want your grandchildren to feel loved and supported by you, no matter where they fall in the birth order. Imagine being able to give each one of them a gift of textbooks at the start of each semester, a laptop after they receive their acceptance letters or a calculator or special tool they need for their trade.
With the Tax Cut and Jobs Act of 2017, you may also use these funds for up to $10,000 per year for K - 12 tuition for private schools. Check with your tax advisor since all states may not currently comply.
You can set up education funds for all of your grandchildren—even if they aren’t born yet—with a simple workaround. Here’s how it works:
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If the grandchild isn’t born yet, simply name your son or daughter as the beneficiary and start funding the account. When a baby comes along sometime in the future, change the beneficiary to be the child. Since the baby is a family member, you can change the beneficiary to your new grandchild.
My grandfather used to give shares of stock to me every year, not while I was in college but after I was married. Those shares helped me to buy my first home, and, more importantly, learn to invest. The greatest part of the gift was the conversation with my grandfather. We talked about what I was going to do with the funds, how to invest them, and my goals.
Contributing to a 529 for your grandkids can be a great opportunity for teaching them about money, saving, and your personal values. Also, it’s a direct connection to what's going on in their lives. Young people are often focused on their circle of friends, so having this deep connection with you is important.
If you pass away, your adult child may take over the account in your place. Simply name them as the successor owner when you establish the account. If they never end up having kids, no worries. They can use it themselves for graduate school or trade school in the future or give the funds to a relative (by changing the beneficiary.) Check with your plan administrator when you set up the 529 plan.
Cashing in is also an option—they’ll just pay taxes on the earnings portion and incur a 10% penalty on that gain (similar to an early IRA withdrawal). Check with your tax advisor as there may be a state tax penalty.
Imagine having college savings accounts for each of your grandkids, all funded today. What a wonderful gift for future generations.
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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