[USER]

5 month old and I am so torn on what the right vehicle is. Florida prepaid vs 529 really. I hate the idea of the money being stuck if she doesn’t want to go to college or is already funded. We don’t make enough to really need tax breaks yet (wife’s finishing school in 2 years and will make 225+ in medicine).

Thoughts? Recommendations on an institution? My banks don’t offer 529. Analysis paralysis to the max currently.

[Hunter]

Like someone else said, 529 can roll into Roth now I think it is at age 30 if funds are unused.

Or you have other option. UGMA/UTMA all assets transfer to child. (You have least control)

Taxable brokerage you decide when you would like to give funds to child (you have most control)

529 education expenses or wait until 30.

[Pauline]

I have experience with Florida Prepaid and 529. I would definitely do the 529 and skip Florida Prepaid. My initial 529 investment tripled from in aggressive portfolio and my prepaid basically went up to cover just tuition and we still have to cover fees.

I believe we get $1800 a semester out of Florida prepaid. My first born we dropped in $10 k for 4 year university option. 18 years later we are getting $1800 a semester for four years which roughly is 16k.

The initial 7 k in 529 went to $21k when he started college last year. The 529 has so much more flexibility and with new Secure 2.0 you have the option of rolling it over to a Roth (35k) for the beneficiary.

Hope this helps.

Don’t miss: Should I set up 529 accounts for the kids in my life?

[Ana]

Buy a house, rent it, let it appreciate, sell it when she goes to college, IF she goes to college. Pay for college with proceeds. Our kid got full rides and didn’t touch 529. PIA because most of the money would pay penalties if we take it out.

Can only use it for further education or another family member….

[Chris]

529 all the way. A modest amount now can fund 5-7 years worth of Roth IRA contributions in 20+ years. Kid gets a bunch of scholarships, for a full ride, then withdraw the scholarship amount from the 529 penalty free. College becomes free, there will likely be a 529 grace window for penalty free withdraw. Kid goes to trade school, covered. Kid doesn’t go to school and has future children, well you just created a quasi-living trust to fund your grandchildren and great grandchildren with 40+ years of growth potential and their roth IRAs.

All of that verse the possibility of a 10% penalty if they decide to not have kids and do anything else with their life. Plus the potential for a state tax deduction/credit; like in my state, we contribute up to the deduction/credit, so the 10% impact is lowered.

[Sean]

Never invest with a bank anyways, so that’s a good thing that they don’t offer it.

Generally Florida prepaid is better, but nothing wrong with a good old fashioned 529. 529 is much more flexible.

[Sheila]

We bought 2 years of FL Prepaid for both our kids. Maybe not the biggest money maker- but you can hedge your bets by splitting the FPP with the 529. If the market has a down year- use the FPP, then you are not taking the money out when the market is down.

We also left the state of FL but by buying FPP it allows us to get in-state tuition should our kids go to a FL school.

Explore these too: I want to do a Vanguard 529 for each kid. Does anyone know how easy they are to move and if there’s a specific process?

[Ashley]

My parents got FL Prepaid for myself and sisters.

I ended up not using all the credits when I graduated (scholarships) and had the option to cash out or transfer to my siblings or children. We had a great experience so we sep up Fl prepay for our kids too.

Remember your locking in the rate of college now vs the price of college in 20 years.

[Andrea]

I had a Florida prepaid that was never used. Changed the recipient on it twice. Got a full refund on it but nothing else. Tied up for 12 years…no interest.

It may be different now but something to consider.

[Author]

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