Ep. 418: What Do We Do If We Might Over-Fund Our 529?

We want to answer your questions about money. Email us and you may hear yours on the air: askpete@petetheplanner.com

This week on the Pete the Planner Show, Pete hits the beep AGAIN and wonders if he’s a radio master by now after doing this for 12 years?! What do you think?

No time to listen?  Here’s a preview of what happened and when:

Show Notes:

MAILBAG QUESTION 1: WHAT DO WE DO WITH AN OVER-FUNDED 529? [3:42]

  • My wife and I have a 10 year-old child. We’ve used a 529 account to set money aside for her future college expenses and with that and other gifts, we’ve saved around $75,000. We’ll continue to to invest $5,000 per year for the next 8 years until she heads to school. I think we’ll ending up having saved more than enough and should she be awarded scholarships, that will definitely be the case. Does it make sense to save money for college in another account other than the 529?

    • DAMIAN: If money’s left over in a 529, you’ve got a few options: you can re-designate it to someone else; maybe even to another child down the line.
    • You can also take the money out, with some tax penalties and such.
    • PETE: There are some circumstances where you should stop using a 529 and use something else, like a Roth account.
    • DAMIAN: If you think you’re going to have excess, you might want to start looking towards other accounts. Know what your taxation is going to be in the state where you live.

 

MAILBAG QUESTION 2: BIG INCOME BUMP, WHAT DO I DO?: [16:01]

  • “My husband and I stand to make significantly more money in the near future, as both our incomes are increasing. We intend to keep an eye on our expenses and make sure we don’t have too much lifestyle creep. But we’d like to reward ourselves with some things we’d been working toward. They’d be one time expenses, and we’re not sure if that counts as lifestyle creep. Do we have your blessing (or Damian’s)?”

    • DAMIAN: One time expenses, eh? Is this a new thing, or does this new, one-time thing set a new higher standard for how this goes on in the future?
    • PETE: I call this the Wine Problem. Once you have a good bottle of wine, it ruins what you were used to.
    • Also, isn’t this the ultimate get-out-of-jail-free card? Now’s the time to examine all of your current financial shortcomings. Heal those.
    • DAMIAN: If you didn’t have financial goals before, you better have some now.

There’s more segments to check out in the full show! There might be something you can think about.  — click PLAY below.


— HEY! Before you go, give your personal finances a facelift. Peep our personal guidance platform: Hey Money.

 

One thought on “Ep. 418: What Do We Do If We Might Over-Fund Our 529?

  1. I’m kind of amazed that Pete is taking the position that kids get to pick how expensive their college will be. Not in our family, we told ours we would pay for the amount State U costs and if they want to take that money to Princeton or some other overpriced prestige school then the shortfall is on them. They all went to State U. They are all doing fine and all paid for grad school withoutor help. I just won’t fund absurd education costs when they simply don’t pay out. Actually they all got free four year degrees including room and board even though we were millionaire parents. That was even better!

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