Posted: 7/30/2026 12:38:01 PM EDT
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Is there a way/ best way to move money from father's IRA to invest in a child's college fund? I've been looking through the Vanguard info trying to find the best way. Thanks |
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Do not sacrifice your retirement to pay for college. Roth IRA contributions (not profits) can be withdrawn without penalty at any time. Be wary of 529 accounts. If you have one kid and they don't attend college for any reason (death, disabled, doesn't want to, etc) then the money is trapped in a 529 and you will have to pay a penalty to get the money out. There are more effective and more flexible ways to save for college. |
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Originally Posted By Morgan321: Do not sacrifice your retirement to pay for college. Roth IRA contributions (not profits) can be withdrawn without penalty at any time. Be wary of 529 accounts. If you have one kid and they don't attend college for any reason (death, disabled, doesn't want to, etc) then the money is trapped in a 529 and you will have to pay a penalty to get the money out. There are more effective and more flexible ways to save for college. The rules on the 529 varies state to state......OP needs to check the regs for the 529 account for his state. In MO...you can use the money for K-12 schooling, and other "education"...not just college. . |
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Originally Posted By imq707s: In MO...you can use the money for K-12 schooling, and other "education"...not just college. . There is a limit on how much you can rollover from 529 to Roth and if your kid dies you can’t even do that. |
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Originally Posted By Morgan321: The point remains - if your kid has no education bills then you have no way to get the cash out without paying taxes plus penalty. There is a limit on how much you can rollover from 529 to Roth and if your kid dies you can’t even do that. It’s reasonably obvious a 529 can not fund a Roth if that person is dead. |
Words fall from your mouth like shit from ass.
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Originally Posted By Morgan321: Do not sacrifice your retirement to pay for college. Roth IRA contributions (not profits) can be withdrawn without penalty at any time. Be wary of 529 accounts. If you have one kid and they don't attend college for any reason (death, disabled, doesn't want to, etc) then the money is trapped in a 529 and you will have to pay a penalty to get the money out. There are more effective and more flexible ways to save for college. They will lend you money for college a lot easier than they'll lend you money for retirement. |
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Originally Posted By Morgan321: The point remains - if your kid has no education bills then you have no way to get the cash out without paying taxes plus penalty. There is a limit on how much you can rollover from 529 to Roth and if your kid dies you can’t even do that. Originally Posted By Morgan321: The point remains - if your kid has no education bills then you have no way to get the cash out without paying taxes plus penalty. There is a limit on how much you can rollover from 529 to Roth and if your kid dies you can’t even do that. Just looked at the Wisconsin edvest (529) info. You may have to pay the tax but there are exemptions to the 10% penalty. Under what circumstances are taxable withdrawals not subject to the 10% federal penalty tax? Taxable withdrawals that are not subject to the 10% federal penalty tax are withdrawals due to the beneficiary's death, the permanent disability of the beneficiary, the beneficiary's receipt of a scholarship award or certain other tax-free amounts, or the beneficiary's attendance at a military academy. A taxable withdrawal will be subject to applicable state and federal income tax on earnings, if any. |
Bad things happen in isolated instances in an armed populace, horrific things happen to a disarmed populace. 20th Century Democide https://www.hawaii.edu/powerkills/20TH.HTM
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Originally Posted By Morgan321: Do not sacrifice your retirement to pay for college. Roth IRA contributions (not profits) can be withdrawn without penalty at any time. Be wary of 529 accounts. If you have one kid and they don't attend college for any reason (death, disabled, doesn't want to, etc) then the money is trapped in a 529 and you will have to pay a penalty to get the money out. There are more effective and more flexible ways to save for college. I'm really not sold on 529's for this reason. Everyone seems to think they are the greatest thing since sliced bread. However, it seems like it's terrible if your child chooses not to go to college. You can roll $35k to a Roth IRA, but in the grand scheme of things that's nothing if you're using it for a college fund. I still putting some money in one, but I'm not sure I'm going to put my child's whole college fund in one. |
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Originally Posted By slowr1der: I'm really not sold on 529's for this reason. Everyone seems to think they are the greatest thing since sliced bread. However, it seems like it's terrible if your child chooses not to go to college. You can roll $35k to a Roth IRA, but in the grand scheme of things that's nothing if you're using it for a college fund. I still putting some money in one, but I'm not sure I'm going to put my child's whole college fund in one. Most people probably don’t even save $35,000 for their child’s education. Everyone’s situation is different but there are some definite advantages to 529’s. |
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Originally Posted By Cooper1: Is there a way/ best way to move money from father's IRA to invest in a child's college fund? I've been looking through the Vanguard info trying to find the best way. Thanks You can move any contributions from a Roth without penalty. Its the gains you get fucked on. I would not move anything from retirement accounts to a 529 unless my Roth was $1M+ As for moving 529 money, you can move unutilized funds up to $35k (lifetime) to a Roth IRA within a set of rules. Our plan is to use the 529 money for college/trade school/certificates and what ever is left, if anything, roll over to a Roth to get them started for retirement. |
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Originally Posted By slowr1der: I'm really not sold on 529's for this reason. Everyone seems to think they are the greatest thing since sliced bread. However, it seems like it's terrible if your child chooses not to go to college. You can roll $35k to a Roth IRA, but in the grand scheme of things that's nothing if you're using it for a college fund. I still putting some money in one, but I'm not sure I'm going to put my child's whole college fund in one. I do not believe many people think “it’s the greatest thing since sliced bread.” It’s an investment vehicle with pros and cons. Nothing else. For me, the pros are compelling and the cons are manageable. When those align, it’s fine by me. |
Words fall from your mouth like shit from ass.
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Originally Posted By Steamedliver: I do not believe many people think “it’s the greatest thing since sliced bread.” It’s an investment vehicle with pros and cons. Nothing else. Virtually all of the talking heads in the financial and investing areas say it's the best way to save for college. You're correct that it has pros and cons. It's not a bad way to save for college but there are better ways. It's the same as the pretax vs roth situation - both are good but for any given situation one is better than the other. We opened a 529 for our oldest kid when he was born. I didn't want to do a 529 but the father in law said if we started one he would put money in it, so I did and he deposited $5k in it. Our oldest kid wound up disabled and won't go to college. I called Fidelity (where the 529 is) and asked about options and you can apparently "rollover" a 529 from one account to another 529 that has a different beneficiary. So we rolled it over to our youngest daughter who will be starting college soon. You can do this (effectively change the beneficiary without penalty) to anybody who is a sibling, parent, or child of the original beneficiary. Oldest disabled kid gets medicaid and if the 529 was rolled into a roth for him it would disqualify him for medicaid. If we only had one kid that money would be locked away in the 529 and we would have to pay taxes (22% federal, 5% state) and 10% penalty to get it out - a 37% tax. I find myself typing this every time they come up here and it usually goes unheeded: 1. There are other ways to save for college where profits are tax free, you get to invest in anything, and your money is not locked in a 529. 2. The only advantage to 529 is that most states give you a tax deduction for contributions. You can save via other methods where profits are tax free, contribute the college money to a 529 and withdraw it the next day and still get the tax deduction in most states. The advantage of this is that you get to deduct the principal and profits, whereas the former method (save in a 529) you only get a deduction on the principal. So you actually come out ahead on state taxes if you do not save in a 529. |
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Originally Posted By Steamedliver: You can also use a 529 to fund a Roth … The beneficiary's Roth, not the donor's. I came here to tell the OP he said it backwards, then found out he was thinking of doing it backwards. The contributions can come out of the Roth penalty and tax free at any time. Education expenses can come out of the Roth penalty free. |
Exposure to views that distress and offend is a form of education unto itself. -U.S. Court of Appeals for the Ninth Circuit in Reges v Cauce
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Originally Posted By PepePewPew: The beneficiary's Roth, not the donor's. I came here to tell the OP he said it backwards, then found out he was thinking of doing it backwards. The contributions can come out of the Roth penalty and tax free at any time. Education expenses can come out of the Roth penalty free. Education expenses can come out of a traditional IRA penalty free too. Still subject to income tax but that's true in retirement as well. https://finaid.org/savings/retirementplans/ |
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Originally Posted By Morgan321: I think many people do. Virtually all of the talking heads in the financial and investing areas say it's the best way to save for college. You're correct that it has pros and cons. It's not a bad way to save for college but there are better ways. It's the same as the pretax vs roth situation - both are good but for any given situation one is better than the other. We opened a 529 for our oldest kid when he was born. I didn't want to do a 529 but the father in law said if we started one he would put money in it, so I did and he deposited $5k in it. Our oldest kid wound up disabled and won't go to college. I called Fidelity (where the 529 is) and asked about options and you can apparently "rollover" a 529 from one account to another 529 that has a different beneficiary. So we rolled it over to our youngest daughter who will be starting college soon. You can do this (effectively change the beneficiary without penalty) to anybody who is a sibling, parent, or child of the original beneficiary. Oldest disabled kid gets medicaid and if the 529 was rolled into a roth for him it would disqualify him for medicaid. If we only had one kid that money would be locked away in the 529 and we would have to pay taxes (22% federal, 5% state) and 10% penalty to get it out - a 37% tax. I find myself typing this every time they come up here and it usually goes unheeded: 1. There are other ways to save for college where profits are tax free, you get to invest in anything, and your money is not locked in a 529. 2. The only advantage to 529 is that most states give you a tax deduction for contributions. You can save via other methods where profits are tax free, contribute the college money to a 529 and withdraw it the next day and still get the tax deduction in most states. The advantage of this is that you get to deduct the principal and profits, whereas the former method (save in a 529) you only get a deduction on the principal. So you actually come out ahead on state taxes if you do not save in a 529. The federal penalty is waived for disability, I believe that has been the rule for awhile. Taxes are still in place. You should look into an ABLE account, and recently you can roll a 529 into that account. You can roll the 529 as YOU as the beneficiary, and then roll $35k into your Roth. Then roll the 529 to your other kid. Of course all the Roth rules apply. There are other ways to save for a child’s education, of course. You (specifically you) made a 529 plan because your father in law would invest into it. He wanted to insure the money was going to be used for education (aside from penalties if not). My parents did the same for my kids. Direct question, did you continue to fund the 529 after the FIL invested $5k? I’m reasonably confident that you did continue to invest, but why did you continue? Those are precisely why I have a 529 for both my kids. Has tax benefits, less so for me living in a state without state income tax. However I did set it up in a state with income tax (I moved from there). Family members have contributed and they want to know the money will go to the kid for college. It’s a set and forget with a monthly transfer (a lot of accounts can do that, but this is a benefit). If something happens to me, I can hope my kids will specifically use that money for education. It’s the same hope I have with how they would use my life insurance (for their betterment). Like I said earlier. The pros of the 529 are appealing to me, and I could manage the cons. |
Words fall from your mouth like shit from ass.
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Originally Posted By Steamedliver: The federal penalty is waived for disability, I believe that has been the rule for awhile. You should look into an ABLE account, and recently you can roll a 529 into that account. Direct question, did you continue to fund the 529 after the FIL invested $5k? I’m reasonably confident that you did continue to invest, but why did you continue? Like I said earlier. The pros of the 529 are appealing to me, and I could manage the cons. ABLE accounts are like 529s - there are situations where they are useful and situations where they are not. In our case there is no benefit to an able account for our oldest kid, he has one but it serves no purpose and isn't used. No we didn't contribute anything to the 529 because there was no advantage to it. We didn't pay state income tax at the time so there was no tax benefit, I didn't want money locked away, and we saved money elsewhere that isn't subject to taxes on profits. That's all I'm saying - a 529 is not universally the best or worst option. For us it was a poor choice, for others it is a good choice. |
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Not tax benefit for me now. No state taxes. The overall benefits outweighed the cons for us. I only mentioned the able account because a 529 can roll to one. That’s all. When I did some reading, I didn’t realize that I can myself a beneficiary of the 529 and then fund a Roth with it. |
Words fall from your mouth like shit from ass.
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Originally Posted By Steamedliver: When I did some reading, I didn’t realize that I can myself a beneficiary of the 529 and then fund a Roth with it. You could split a 529 and "rollover" half into two new 529, one with you as the beneficiary and one with the wife as the benficiary. Then you and the wife could each rollover the roth contribuion max per year to empty the 529 faster. I'm unsure if the roth contribution income limits apply (since it is a "rollover" rather than a new contribution), check on that before doing anything if you are above the contribution limit. |
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529 is working out great so far saving for my kid. Have put in 60k so far since 2017. Have made 62k in tax free earnings. And I can deduct contributions. I know my kid is going to college in two years. She wants to be a teacher so even if I over save for a bachelors, she will likely need a masters. And if I still have some left then I will keep it in there in hopes of giving it to some grandkids in a few decades of additional tax free growth. |
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