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Death to the 529

January 10th, 2013 at 09:39 am

So, I talked to MIL to sort out the 529.

The final nail in the coffin was that BM's 529 plan didn't make any money in 2012. Even MIL knows that is "really terrible." !!

I don't have anything personal against 529 plans - they are a good tool for the wealthier. BUT, it is good to know how your 529 plans are performing and it is good to know if you are actually saving enough taxes to warrant the higher fees and all of the limitations that come with a 529 plan. I included a helpful article below, that discusses some of this. In addition, many tax cuts were just extended more permanently. For us, this means our taxable investments won't be taxed, for the foreseeable future. 15% tax bracket = 0% capital gains tax rate. & doubtful we will have gains large enough to bump us into a higher tax bracket, especially since we can harvest tax gains periodically. This recent tax law change makes the 529 plan pretty useless for our purposes.

I won't hold my breath until MIL gets her money out - I know stock broker will give her a really hard time about it. The penalties and interest don't amount to a hill of beans since the thing never made any money.

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9 Situations In Which a 529 Plan May Not Make Sense

https://blog.wealthfront.com/9-situations-529-plan-sense/

1 Responses to “Death to the 529”

  1. Amber Says:

    I personally like the prepaid plans. Thanks for sharing

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