Attn posting legend Milwaukee Mike

[The Kraken]

Mike

We have a new addition to the Kraken household, she's pushing 8 weeks right now and it has me thinking, what do I need to be doing financially for her, and that would benefit us?

Off the top of my head is the 529, a savings account for liquid assets, an HSA for health required costs

Anything else I'm missing that we should be doing? Is my way of thinking outdated, are there better options these days?

And in general, what are your thoughts on the 529? The contributions aren't deductible but the growth is from my understanding, is that the best way to invest for her college?

Any input would be GREATLY appreciated

[JMon]

Kraken, you may want check with your state. Certain states allow 529 deductable contributions. Mine does. Federal you cant for sue.

[No coincidences]

5-teamer.

[The Kraken]

Thanks Jmon

I know the state of WA suspended their 529 in favor of another program which has also been suspended due to the affordable college act, or some shit like that

So right now we don't have anything

But I think I can set it up in any state, I dunno. This is why I need MM

Common MM, check in pal

We can barter, if you're having high BP, blood in your stool, chest pains, general tiredness, ED, I can help!!!!

[opie1988]

We did a 529. It's the way to go. When they reopen the Texas Tomorrow Fund, I'll hedge with that. Both great programs.

[zam77]

So right now we don't have anything

Krakle... 8 weeks old. Focus on that pal. You definitely have something.

[Chi_archie]

also make sure that you create a trust for her, that she will receive in full upon her 21st birthday

but in order for her to collect she must first log into the 2037 version of SBR and make a video with old balls kraken picking some ML winners in death ball or jai lai or something in vogue at the time

[blackHIPPY]

Better teach that lil niggga to rap or keep a basketball in his hands and hope he make it to the league

[texhooper]

Someone make a thread about Avril Lavigne getting killed in a gas station fire explosion or something so Mike will check SBR again!

[The Kraken]

Tex good point

Opie and Archei are plenty qualified to give the same advice

Glad both checked in

[BigDeem5]

Kraken, I'll let Mike know you seek his advice

[milwaukee mike]

i'm strongly against 529 plans in most cases

the problem is that there are often unforeseen better options... here's what happened to a lot of people 15 years ago...

1) put 30k in 529 plan, getting some tax savings on the state of Wisconsin (let's say $1000)
2) watch the balance fluctuate
3) pay fees
4) let's be generous and say there is 40k in the account 10 years later, which is then used for college

so there was some tax savings on the contributions (depending on what state you are in) and also on the growth

BUT BUT BUT HERE'S WHAT THE PROMOTERS WON'T TELL YOU

1) the growth is probably tax free anyway, for anyone with taxable income under 75k (after deductions) there is a 0% rate on dividends and capital gains. so even if you held stocks or a stock-based mutual funds outside the 529 plan, you wouldn't pay tax on the growth
2) HERE'S THE BIGGIE. many people that have large 529 plans have totally ****** themself and/or their child out of huge tax credits. there is an american opportunity credit of $2500/year for the first 4 years that you can't claim if all the tuition was paid by 529 plan.

so it has been the case with a large % of people, that they got a puny tax savings, paid a bunch of fees, and then lost out on $10,000 in tax credits that they would've gotten by just paying the tuition out of pocket.

other problems involve eligibility for scholarships and grants, and trying to transfer or back it out if there are no college costs

[milwaukee mike]

hsa on the other hand is terrific... gives you a tax deduction right away, little or no fees

[milwaukee mike]

and i forgot to say CONGRATS!

any spare $$ you have is usually best spent paying down the mortgage, car loans, etc... many lives don't go totally smoothly and if/when things get rough it's better to have very little or no debt

impossible to go bankrupt or get a house foreclosed on if you don't owe anything!

[The Kraken]

Kraken, I'll let Mike know you seek his advice

Thanks Deem

[The Kraken]

i'm strongly against 529 plans in most cases

the problem is that there are often unforeseen better options... here's what happened to a lot of people 15 years ago...

1) put 30k in 529 plan, getting some tax savings on the state of Wisconsin (let's say $1000)
2) watch the balance fluctuate
3) pay fees
4) let's be generous and say there is 40k in the account 10 years later, which is then used for college

so there was some tax savings on the contributions (depending on what state you are in) and also on the growth

BUT BUT BUT HERE'S WHAT THE PROMOTERS WON'T TELL YOU

1) the growth is probably tax free anyway, for anyone with taxable income under 75k (after deductions) there is a 0% rate on dividends and capital gains. so even if you held stocks or a stock-based mutual funds outside the 529 plan, you wouldn't pay tax on the growth
2) HERE'S THE BIGGIE. many people that have large 529 plans have totally ****** themself and/or their child out of huge tax credits. there is an american opportunity credit of $2500/year for the first 4 years that you can't claim if all the tuition was paid by 529 plan.

so it has been the case with a large % of people, that they got a puny tax savings, paid a bunch of fees, and then lost out on $10,000 in tax credits that they would've gotten by just paying the tuition out of pocket.

other problems involve eligibility for scholarships and grants, and trying to transfer or back it out if there are no college costs

hsa on the other hand is terrific... gives you a tax deduction right away, little or no fees

and i forgot to say CONGRATS!

any spare $$ you have is usually best spent paying down the mortgage, car loans, etc... many lives don't go totally smoothly and if/when things get rough it's better to have very little or no debt

impossible to go bankrupt or get a house foreclosed on if you don't owe anything!

Thank you for taking the time to be thoughtful and respond

Exactly why I asked your opinion, you mentioned many things I hadn't considered/didn't know about

Everything I read was to start a 529, but it was on generic retirement planning sites. Then I had a friend tell me to not worry about the 529 and max out my roth. It's all just confusing and honestly, it was the first time I ever heard anyone say the 529 might not be the best investment tool.

Thanks again Mike

[milwaukee mike]

anytime kraken

i would always be skeptical of advice from someone that gets $$ from that advice!

in the question of traditional ira contributions vs roth vs 401k here is what i would do in this order...

1) if there's a match on 401k then put in at least enough to get the maximum matching contribution
2) if you're over 38k or so in taxable income for single, 76k for married, then you're in the 25% bracket instead of 15%, i would go the traditional ira or 401k route, to take the deduction NOW
3) if you're super wealthy or in the 15% bracket, then the roth ira might be better... but try to forecast retirement! for example i can get a deduction now in wisconsin on a traditional ira contribution, and when i take it out i will probably live in nevada or florida with no income tax