So, this is the first post.
I was listening to the radio today and heard an interesting discussion about college funds. The basic opinion was that saving for your children's education should not be done until you have fully funded your own retirement account. The rationalle being that there are many ways to pay for college (part time/summer jobs, scholarships, grants, student loans, etc.), and only one way to pay for retirement (you put money in a savings account).
In particular, it was advised to avoid special government college savings accounts (529 plans) especially when your kids are young. If you put tons of money in and don't end up needing it because your child is a good student and earned a full ride scholarship, you will have to pay penalties to use that money for something else.
I just checked out some info on savingforcollege.com and they say that if a beneficiary dies, or gets a scholarship that you can file for an exception and avoid the penalty, but that there are still tax issues involved, because non-qualified distributions will be counted as taxable income in the year they are used. So I suppose that if you took $50,000 not needed for school and used it as a downpayment on a house, that would increase your taxable income by $50,000, thrusting you into a higher tax bracket for that year instead of spreading it out over several years at a lower tax rate.
Anyway, I thought it was an interesting discussion, and would like to hear other thoughts on the subject. Addy is only 3, so my practical experience is very shallow compared to many of you.
~A
