Financial Question
sheeboo2
We have just been offered an amazingly generous gift by my mother-in-law: she recently started a new job, which will last for 2-3 years until her retirement. Her salary has been tripled and she wants to contribute money every month to our daughter's college fund.
We don't actually have a college savings account for our daughter. I have an account for her, in her name, where I've managed to put a small bit away, but that's it.
My question is: how do unschoolers save for their children's future? I don't want to assume that my 7 year old will or will not want to go to college when she's older and I know traditional 529 accounts are heavily penalized when the money is used for anything other than "education."
I think my MIL will be open to a conversation about "seed money" in general, rather than "college" money in particular. She sees how wonderful unschooling is for our family, and I think she'll appreciate that N *may* choose a non-traditional educational path, like starting a business, or sailing around the world, whatever. She may choose to go to university, too, but I don't want that to be predetermined by our planning, or lack thereof.
Any experience, thoughts, suggestions would be greatly appreciated!
Brie
We don't actually have a college savings account for our daughter. I have an account for her, in her name, where I've managed to put a small bit away, but that's it.
My question is: how do unschoolers save for their children's future? I don't want to assume that my 7 year old will or will not want to go to college when she's older and I know traditional 529 accounts are heavily penalized when the money is used for anything other than "education."
I think my MIL will be open to a conversation about "seed money" in general, rather than "college" money in particular. She sees how wonderful unschooling is for our family, and I think she'll appreciate that N *may* choose a non-traditional educational path, like starting a business, or sailing around the world, whatever. She may choose to go to university, too, but I don't want that to be predetermined by our planning, or lack thereof.
Any experience, thoughts, suggestions would be greatly appreciated!
Brie
John and Amanda Slater
You could look into an UGMA or UTMA depending on your state. It is a universal
transfer/gift to minors act. The money can be used for anything except basic
living expenses. It can fund college, camps, computers, trade school, cars,
etc. In different states it is transferable to kids at different ages. But it
can be accessed at anytime by the parents.
This is from a financial standpoint, but it is good information never the less.
http://www.finaid.org/savings/ugma.phtml
Amanda
Eli 9, Samuel 8
[Non-text portions of this message have been removed]
transfer/gift to minors act. The money can be used for anything except basic
living expenses. It can fund college, camps, computers, trade school, cars,
etc. In different states it is transferable to kids at different ages. But it
can be accessed at anytime by the parents.
This is from a financial standpoint, but it is good information never the less.
http://www.finaid.org/savings/ugma.phtml
Amanda
Eli 9, Samuel 8
[Non-text portions of this message have been removed]
Kirstin Eventyr
The great benefit of a 529 is that it can grow tax free. Money that is
withdrawn from a Section 529 plan that is not used for higher education
expenses will be subject to a 10% penalty and income tax on the profits.
For example, if you put $10,000 into a Section 529 plan that is now worth
$15,000, you�d have a $5,000 profit. If that entire amount is withdrawn for
non-college purposes, you�d have to pay income tax and a 10% penalty on the
$5,000 gain.
There are up and down sides. We were faced with the same quandary after
receiving an inheritance for my daughters. We decided to invest in a 529 for
1/3, a general stock account for 1/3 and left 1/3 in cash for their
educational expenses while still school age homeschoolers. Good luck!
Kirstin
On Fri, Nov 12, 2010 at 9:13 AM, John and Amanda Slater <
fourslaterz@...> wrote:
withdrawn from a Section 529 plan that is not used for higher education
expenses will be subject to a 10% penalty and income tax on the profits.
For example, if you put $10,000 into a Section 529 plan that is now worth
$15,000, you�d have a $5,000 profit. If that entire amount is withdrawn for
non-college purposes, you�d have to pay income tax and a 10% penalty on the
$5,000 gain.
There are up and down sides. We were faced with the same quandary after
receiving an inheritance for my daughters. We decided to invest in a 529 for
1/3, a general stock account for 1/3 and left 1/3 in cash for their
educational expenses while still school age homeschoolers. Good luck!
Kirstin
On Fri, Nov 12, 2010 at 9:13 AM, John and Amanda Slater <
fourslaterz@...> wrote:
>[Non-text portions of this message have been removed]
>
> You could look into an UGMA or UTMA depending on your state. It is a
> universal
> transfer/gift to minors act. The money can be used for anything except
> basic
> living expenses. It can fund college, camps, computers, trade school, cars,
>
> etc. In different states it is transferable to kids at different ages. But
> it
> can be accessed at anytime by the parents.
>
> This is from a financial standpoint, but it is good information never the
> less.
> http://www.finaid.org/savings/ugma.phtml
>
> Amanda
> Eli 9, Samuel 8
>
> [Non-text portions of this message have been removed]
>
>
>