check with a financial planner on ways to invest for education which
reduce AGI.

I am not a huge fan of investing in accounts which can only be used for
education. What if a trip to Europe proves to be more educational than
4 years in college. 75% of what's important in life cannot be learned
in a classroom, so I would prefer saving in other mechanisms.

it is a matter of personal choice and I'd like to see what answers you
get.

Thank you. Not just for the information, which was very helpful (that
applies to everyone in this thread, except one). But also for just
answering the question, instead of trying to read into it.

Regarding maximizing my 401k: yep, that's exactly what I'm doing, and
that will get me under 100k for continued Roth contributions, but my
dividends will push me back over. And I can't sell the stocks because
that will push me over 100k, too (but I'm not interested in selling
anyways). While my primary interest here is planning for the future
(either my children's or my own), lowering my AGI could be a nice
side-effect of contributing to a 529 plan, assuming it would actually
lower my AGI (would it?).

I don't think of myself or the idea as brilliant, but I'll take
complements whenever I can get them

"jIM" <noreplysoccer[at]hotmail.com> wrote in message
news:1138579485.277494.67910[at]f14g2000cwb.googlegroups.com...
- quote -

Consider an alternative: Fund college to the extent possible with school
loans in the KID's name.Separately, create a college funding plan of some
kind that peaks about the time the kid is scheduled to graduate. If the kid
graduates by some mutually agreed (well, maybe unilaterally imposed) date,
pay off the loan for them; if not, it's theirs.

Kinda motivates graduation.
--
Chris Cowles
Gainesville, FL

I have invested about $5000 in DRIPS for kids I don't have yet either.
It's a good move to save early, time will help this money grow.

If you have slightly exceeded Roth limits, have you considered
increasing 401k contributions to try and get under the Roth income
limit? Roth limit is based on agi, I believe. 401k should reduce AGI
on income taxes filed to IRS. Verify this information, I might be
wrong.

Guidlines for saving:

1) start saving at a young age
2) saving 10% of income is a good starting point
3) save for RETIREMENT first
4) children can get loans easier than a retireee can get a loan. If in
doubt, save for retirment.
5) diversify account types- having Roth IRA, 401k and taxable accounts
allows one to take advantage of future tax laws.

a suggestion- increase 401k contributions and consider a 401k loan for
child's education. If the loan is taken out within 10 years of
probable retirement, consider than loan is paid back with interest into
401k. This would be similar to investing in bonds, except interest is
paid by you to you, instead of bond fund paying interest to you.

If you have maxed out all your other savings options, then setting up a Solo
529 plan would make sense if you were sure grad school is in your future.

Set up a regular 529 plan and name yourself as beneficiary.

<c0mput3rb0y[at]hotmail.com> wrote in message
news:1138491593.029406.124750[at]o13g2000cwo.googlegroups.com...
- quote -

"W. Wells" <otf70[at]nc.rr.com> writes:
- quote -

It seems brilliant to me. The most powerful tool savers
and investors have is time - the sooner money is put away
for future expenditures, the better.

- quote -

The education-specific accounts don't just offer tax deferral
(which is effectively what one gets by buying a non-dividend
paying stock and only paying taxes on the cap gains when one
sells). The education accounts offer tax *free* gains.

However, an ESA is not useful for our OP, as the beneficiary
has to be under 18 (or "special needs") when contributions
are made. (I see nothing which states that one cannot contribute
to an ESA for oneself, but that only helps if one is, himself,
still under 18). Also the beneficiary must be under 30
and if the benficiary turns 30, the account may be rolled
over into another family member's ESA.

Qualified Tuition Programs (otherwise known as 529 plans)
might be a closer fit for our OP - I don't htink there is
a limit on the age of the beneficiary. And the designated
beneficiary isn't necessarily (or generally!) the owner of
the account. Finally, the designated beneficiary may be changed
to another member of the previous beneficiary's family.

That all said, I'd strongly recomend that the OP max
out all of his retirement savings - Roth IRA, 401k, etc
first. After that, start thinking about education
savings. I think he said he made too much for a Roth.
That being the case, a 529 might be reasonable if he's
pretty certain that he or another member of his family
will eventually use the money for educational expenses.

If he's not certain about the latter - that he or his
kid or his siblings kid or whoever will be going to
college - I'd lean towards suggesting that excess savings
above what he can put into his 401k/IRA/etc simply
be invested in a long-term tax efficient mutual fund
or two and not worry about the complications of the
various special programs. 529s add several wrinkles
which both complicate their use and offset the
tax benefits (ie. fees, investment restrictions, etc).

Excellent information about both ESAs and QTPs
directly from the IRS:
http://www.irs.gov/pub/irs-pdf/p970.pdf

(including details about what exactly it means when
they say "members of the benficiary's family")






--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

It seems strange to me to invest for children that you don't have yet. You
didn't mention if you were married.
If you are wanting to sock away the money and not have to pay taxes why not
just invest in stock that don't pay dividends? These are usually growth
stocks.
<c0mput3rb0y[at]hotmail.com> wrote in message
news:1138491593.029406.124750[at]o13g2000cwo.googlegroups.com...
- quote -

Hello,

I'm vaguely familiar with the Coverdell and 529 plans for school
savings. But the impression I have is that these plans are geared as
education savings plans for children.

Here's my situation and my goals:

1) At this time I have no children, but I'd like to save up now so
that when I do have kids, I'll already have started saving for them;
2) I'd also like the flexibility to use the money for myself in the
event I decide to go to graduates school (either get an MS or an MBA);

For the last 3 years I've been investing in a Roth IRA, although I did
that more as a supplement for retirement than as an education savings
account. But I've now slightly exceeded the limits for continued Roth
contribution (which I THINK is still a $100k income).

Is the Roth my only option? I'd love to be able to add to add to my
401k + Roth + some education investment plan.

Thanks in advance for any advice.