Retiring Early

Monday, January 22, 2007

More on 529 plans...

No schoolYou probably remember me calling attention to a comment made by My Pocket Change in one of his posts about the feasibility of using 529 plans for general savings, instead of educational savings. My post was met with some amount of skepticism and I was planning a more formal response until I saw this one over at My 1st Million at 33. Bravo to the sheer amount of work put in to model the possibilities!

ML, the guest blogger who put the post together, calls this part one, and truth be told, I'm very interested in what else could possibly be added to the equation (pun intended). At the end of part one, the following conclusion is reached (emphasis mine):

At this point, you’re probably thinking, “Why bother!” Indeed, 401(k), Roth IRA or the traditional IRA, even the non-deductible kind are much better ways to save for retirement. It is only after those have been maxed out, does the 529 plan emerge as a potential alternative. As described so far, it’s applicable to only a very small segment of the population with high disposable income or a lump sum to invest early on.

If the story ends here, this would not have been a useful exercise. Fortunately, there is much more, both in terms of the 529 vs. taxable plan comparisons and ways of utilizing the 529 for qualified educational expenses thus avoiding the 10% penalty. Please stay tuned for Part 2!

Looking forward to what's next. Thanks for carrying the torch and deeply researching this one!



  • At 1/29/2007 3:35 PM, Blogger ML said…


    Thanks for the nod. Part 2 will be up at 1stM tomorrow, or you can jump the gun a bit and check it out at my own blog:


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