Dave Payne wrote:
- quote -

Income tax + 10% penalty...penalty (and of course tax) is based on
earnings only. Call your plan to see if there would be any other fees.

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A Coverdell alone probably won't be enough to cover all the costs, you
can't stuff money into them fast enough. Is your goal to cover a
substantial portion of college costs? If so consider "both".

If you're using your home state's 529 plan you may be getting a tax
benefit from your 529 ontributions - which allows you in effect to put a
little more money in each year.

As Brent said, too much flexibility with investing alternatives isn't
necessarily desirable...figure out if you need that flexibility and what
you'll do with it. If you'll end up buying the kinds of mutual funds you
can get in a 529 it might not be much of an advantage. Your annual
expenses (for otherwise identical investments, like index mutual funds)
might be lower in a Coverdell but maybe not - because it's a smaller
account be sure to compare the nickel and dime fees for each.

-Tad

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I was told that a CESA *could* be converted to a 529, but that you couldn't
convert from a 529 to a CESA. I'm assuming that's what you meant in your
response even though you said "A CESA to 529 conversion".

What you said makes sense, didn't think about the allowing of earlier
distributions which is a betterment when you go from the 529 to CESA.

Thanks for the candid response.

Still interested in others' input.

"Dave Payne" <joe_nobody[at]spamland.com> wrote in message
news:zlcpc.35210$V_.1389424[at]twister.southeast.rr.com...
- quote -

A CESA to 529 conversion would be "betterment" which is why it is
prohibited. CESA allows for earlier distributions, income tax free, for
secondary private schools. 529 plans do not. The people at the Service were
thinking way ahead of everyone when they made these rules up.

- quote -

Why bother?

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Dave is wrong about just about everything he spews about.

More control of investments generally leads to lower returns, given the
abyssmal global performance of the average investor during the last bull
market. Dave's just encouraging MORE mistakes of this magnitude, because
he's not an expert on human behavior. One is better off ignoring him.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

We opened up a 529 for my daughter back last December but after researching
it some, I've about decided we might should have done a Coverdell instead.
I like the control you get with the Coverdell (you can select the exact
funds you want to use, etc.), and one thing that worries me a bit about the
529 is that the sunset rule may make it taxable in 10 or 12 years, or
whenever it is. I'm not sure I want to gamble with my kid's college fund by
trusting Uncle Sam not to rip the non-taxable rug out from under my feet
when my kid goes to college.

I found out from the folks at Scottrade that I can't roll the 529 to a
Coverdell. Why the heck can you roll a Coverdell to a 529 but you can't go
the opposite direction? That's messed up if you ask me.

Anyway, my question is this: If I pull the cash out of the 529 (I have a
small amount in there anyway), do I just pay a 10% penalty on the earnings
and not the principle, and what other fees are involved?

Also, I open to reasons to stay with the 529 vs. switching to a Coverdell.
A guy I like to listen to about financial stuff is Dave Ramsey
(www.daveramsey.com) and he says the Coverdell is better because you have
more control over the investments, but I'm more than happy to hear other
folks' opinions.