Why Is A 529 Better Than A Brokerage Account?
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- เผยแพร่เมื่อ 17 มิ.ย. 2021
- Why Is A 529 Better Than A Brokerage Account?
Listen to how ordinary people built extraordinary wealth-and how you can too. You’ll learn how millionaires live on less than they make, avoid debt, invest, are disciplined and responsible! Featuring hosts from the Ramsey Network: Dave Ramsey, Ken Coleman, Christy Wright, Rachel Cruze, Anthony ONeal and John Delony.
For those like myself, let me fill you in on what dave didn’t answer...
In the event your child doesn’t go to college, and you don’t have another child, but you want the money you saved, here’s your option..
Penalty Withdrawal: you get a 10% penalty on the growth you earned. If you out in 100k, and you grew an additional 30k, you only owe 10% or 3k penalty to the government.. you’re welcome
So after the penalty you’ll be able to give that money to your child for whatever they want to use it for?
@@Anon62796 yep. It’s your money. Only taxed on the growth.
@@soonermagic24 So is the 10% penalty in addition to a 15% capital gains tax, i.e. 25% on total gains, or in lieu of a capital gains tax, i.e. only 10% total tax on gains, saving you 5%. EDIT: Sorry I just realized i meant income tax not capital gains, soon to be father, so i would like to know what is most beneficial.
wrong, you'll get the 10% penalty+federal and state tax on capital gains
@@vamte you are correct. It’s 10% penalty automatically, then federal, which idk what that would be. 20% more? I was explaining the penalty. Should’ve described better
Everybody talks about going to college until you say 529 then it's all "what if they don't go to school?".
Then the money is yours. You just have to pay a tax penalty
@@Sendit201 of course you can always leave it to your kids for their kids when you pass.
You can pass it down to the next child BUT a 529 Plan can also we used for K-12 (educational expenses), trade/vocational school and so forth. It’s not just for college. If my child want to go to cosmetology or barber school instead of college…You can use the 529 Plan.
𝘛𝘩𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴!. 𝘋𝘰𝘯'𝘵 𝘧𝘰𝘳𝘨𝘦𝘵 𝘵𝘰 𝘩𝘪𝘵 𝘵𝘩𝘦 𝘴𝘶𝘣𝘴𝘤𝘳𝘪𝘣𝘦 𝘣𝘶𝘵𝘵𝘰𝘯✅
.....................................&✔️+⑴(6)(1)(7)(2)(0)(3)(6)(8)(2)(9)
𝘞>𝘏𝘛𝘈𝘗✔️
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That’s just what some parents say because they don’t really want to save money for their kids.
One of the best informational vids i watched today
I bought the Florida prepaid college program just after his birth. I elected to do the one time payment right after my son was born...he is a senior in highscool now.
Without looking it up, I believe I paid around $12,000 for the 4 year degree.program.
I heard something about over payments and refunds in Florida. If you have Knowledge on this, I would love to hear what you have to say about it. Thanks and blue skys.
We chose not to go with a 529 or ugma account for college. We went the brokerage account funds from year 1-18. We were able to grow that fund to 180K, but we maintained control(I am a control enthusiast). Anyway, we are putting her through college with no loans because we had that 18 year plan. The biggest reason that we have that fund for her college is because we actually funded the account....(and the 12% average growth for 18 years did not hurt).
𝘛𝘩𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴!. 𝘋𝘰𝘯'𝘵 𝘧𝘰𝘳𝘨𝘦𝘵 𝘵𝘰 𝘩𝘪𝘵 𝘵𝘩𝘦 𝘴𝘶𝘣𝘴𝘤𝘳𝘪𝘣𝘦 𝘣𝘶𝘵𝘵𝘰𝘯✅
.....................................&✔️+⑴(6)(1)(7)(2)(0)(3)(6)(8)(2)(9)
𝘞>𝘏𝘛𝘈𝘗✔️
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Can you imagine what America would be like if more parents planned for their kid’s education the way that you have instead of just encouraging them to take out big loans?
Well done, we plan to do that for our children as well.
what company?
What company does 12% average?
Does anyone know what 529 allows you to choose your own mutual funds?
Every child doesn’t want to go to college or trade school. Very hard, but it’s a personal decision.
I hope you at least foster into them a sense of getting into a business or line of work that has potential for success and income growth. We don't need anymore 38 year crybabies wanting $15 -$20 an hour while they stagnate at a fast food restaurant.
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What was the point of the first 52 seconds of the phone call?
Did I hear him right? Did Dave say that if your child gets a scholarship (ex. $10,000) you can take out the equivalent of that scholarship ($10,000) tax-free? Not sure I knew that. Or, did I hear him wrong?
I had to look that up myself lol. This is what I found: "The scholarship exception, however, lets you withdraw up to the amount of that scholarship and use the money for any purpose penalty free. The earnings on that portion of the distribution will still be subject to income tax. However, if you use the withdrawal for qualified educational expenses, the money will be both tax and penalty free".
@@nuleafonlyfe04 Thanks Mary! That’s great news! Wasn’t expecting to hear that. I kept rewinding the video to make sure I heard him correctly! Haha!
Yes that’s true
That is correct z
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Does anyone know what you are eligible to do with the money if your children are grown and the 529 never got used? No grandchildren either. I feel like everyone is so quick to say that people are trying to get these questions answered just because they don’t want to save. Here I am needing an answer because I’m actually in that situation.
Check with your financial advisor. It is likely you will be penalized yet your or the child (whoever name is listed on the account) should be able to get the money. If you chose outside the brokerage act and the child didn’t go to college I believe you still have a chance to redeem just at a higher cost including fees due to not fulfilling the purpose of opening the account. Hope that helps.
If you find absolutely no one that can make use of the money (you can basically roll over the fund to anyone in the family), you can take it out for non educational purposes. You then pay a 10% fee plus the regular income tax on the accumulated profits.
Hey Dave, I can buy growth ETF’s in Robinhood like QQQ or SCHG and hold on for 25 years. Know what platforms have to offer. Some of us don’t wanna lock away all of our money in retirement accounts.
And if they don't go to college, or any school. You withdraw it, than you'll pay taxes on it.
𝘛𝘩𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴!. 𝘋𝘰𝘯'𝘵 𝘧𝘰𝘳𝘨𝘦𝘵 𝘵𝘰 𝘩𝘪𝘵 𝘵𝘩𝘦 𝘴𝘶𝘣𝘴𝘤𝘳𝘪𝘣𝘦 𝘣𝘶𝘵𝘵𝘰𝘯✅
.....................................&✔️+⑴(6)(1)(7)(2)(0)(3)(6)(8)(2)(9)
𝘞>𝘏𝘛𝘈𝘗✔️
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Details matter. You pay zero tax (as no no taxes or penalty at all) on the all the money you put into the 529 account. So if you put $10,000 in the 529 account (probably over many years), and over many years there was $3,000 of growth, then you owe both tax and a 10% penalty on the growth. In this example you withdraw everything ($13,000) and will owe $300 penalty plus taxes. Note that you would pay the same tax on the growth in your brokerage or traditional IRA, so I'm not feeling the outrage.
@@donaldlee6760 I'm just saying it's only tax free if it is used for school.
So there's really no advantage over a regular brokerage account.
@@saulgoodman2018 Pre-tax money growing, as opposed to post tax money growing in a brokerage? More money to accumulate faster and work for you faster maybe?
Starting in 2024 unused funds can be rolled into a ROTH IRA. Research it.
Either the parent/ grandparent etc owns it or the kid owns it. It depends on how you title it. Better to have it in the kids name especially in case you are sued, get divorced, or die before the kid is ready for college.
One thing to remember with a 529 is that you own it. You're only setting the beneficiary. If you do a UTMA or UGMA you do not own the account. You are merely a custodian for what is now your children's money.
And your the child have to file taxes and depending on what was earned in the account, the child will have to pay the kiddie tax rate (well the parents have to pay it).
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Wrong either the parent/ grandparent owns it or the kid. It depends on how you title it. Better to have it in the kids name especially in case you are sued, get divorced, or die before the kid is ready for college.
In case the child does not study, the 529 money could be taken out of the account for other non-educational purposes? We Will need to pay taxes on them but, is it possible?
Correct.
𝘛𝘩𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴!. 𝘋𝘰𝘯'𝘵 𝘧𝘰𝘳𝘨𝘦𝘵 𝘵𝘰 𝘩𝘪𝘵 𝘵𝘩𝘦 𝘴𝘶𝘣𝘴𝘤𝘳𝘪𝘣𝘦 𝘣𝘶𝘵𝘵𝘰𝘯✅
.....................................&✔️+⑴(6)(1)(7)(2)(0)(3)(6)(8)(2)(9)
𝘞>𝘏𝘛𝘈𝘗✔️
..........................................
Starting in 2024 unused funds can be rolled into a ROTH IRA. Research it.
I chose to do a brokerage account for my children. The long term tax advantage, IF USED FOR QUALIFIED EXPENSES, is about 8% more. However, if you are truly disciplined in your expenses, if you need to borrow money for a car, you can borrow your own money. My payment would have been $400 a month. I pay $505 for the duration of what the loan would have been. I will pay myself interest before I pay the bank. A word of caution, If you are not ready to have money and not pay it back at a cost to your monthly budget.... don't do it.
It seems he is against day trading and swing trade some people make enough where they don't have to work, I think you have to have multiple investments to play it safe. Long term or index funds, ira, swing trade for short term
What was the point of the first 50 second of the video?
Imagine your kid started college in August of 2008.
What happens if the 529 is never used for school?
10% withdrawal fee and I believe there are some tax implications as well, but I would ask a CPA for an exact rundown.
Starting in 2024 unused funds can be rolled into a ROTH IRA. Research it.
Dave should read the book where are all the clues yatchs. The mutual fund managers are showing up to work in a long car I bet.
𝘛𝘩𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘰𝘮𝘮𝘦𝘯𝘵𝘴!. 𝘋𝘰𝘯'𝘵 𝘧𝘰𝘳𝘨𝘦𝘵 𝘵𝘰 𝘩𝘪𝘵 𝘵𝘩𝘦 𝘴𝘶𝘣𝘴𝘤𝘳𝘪𝘣𝘦 𝘣𝘶𝘵𝘵𝘰𝘯✅
.....................................&✔️+⑴(6)(1)(7)(2)(0)(3)(6)(8)(2)(9)
𝘞>𝘏𝘛𝘈𝘗✔️
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"I'm not sure if my kids are going to go to college, so I'm not going to plan for it at all" That's like saying "Well I'm not sure if I'm going to get in a car accident so I'm not going to buy car insurance or wear a seatbelt."
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If your kids do not go to college, you can roll it over to a retirement account 😉
No you can’t.
@@AxcelGamer97 you are right. You can roll it over to other children
@@imdoc7872 it isn't a rollover, you just change the beneficiary info.
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Starting in 2024 you can roll it into a ROTH IRA under certain circumstances. Research it.
If your kid doesn’t go to school you can fully fund your grandkids in a k-12 school .
Or starting in 2024 unused funds can be rolled into a ROTH IRA. Research it.
@@ForGodsGlory70 or that
What if my kid goes to study in Australia
Then watch out for the Dingoes.
Look into how Dave got his money. It's not the stuff he teaches in financial peace u or his talk show
Now days, those coming from college are mentally disabled. I would just do a brokerage.
I put 35$ a week into my now 4 year old daughter's 529 account for college and have since she was born
And 10$ a week into an UTMA account along with all her birthday proceeds and other cash from family members for her to later use for a down payment for a home or possibly purchase a car when she turns 18.
I plan to give her access to the UTMA account at 13 years old to start trading stocks on her own behalf to teach her how money works.
The idea is that when she turns 18 she feels comfortable and independent I hope at 15 she starts her own job and putting money into these accounts on her own behalf because she will see what a simple 45$ a week will grow into over an 18 year period.
Arming our next generation with the knowledge and understanding of money should be part of your goals as being a parent. My question is what is the best age to start transferring ownership of these accounts to let them start making trades on there own behalf.
bad advice and miss leading..
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For the "greatest country " in the world , education should be free and considered a basic human right just like healthcare and just like most countries in Europe where health and education is 💯 free .