FIREshrinkParticipantStatus: PhysicianPosts: 1007Joined: 01/11/2017
529 as percentage of NW has varied without rhyme or reason.
HSAs are committed to future health care spending, still part of NW.
401k and IRA are fractionally owned by government, still part of NW.
See no reason 529s should be different, still my money and I can spend it however I want. Only good argument for opposing viewpoint is that IRS considers it completed gift, however it is a strange bird as can claw back the gift at will. Hence its unique estate planning attributes and one of many reasons we did not hesitate to fully and possibly overfund. Would not make sense if no longer considered money mine.July 19, 2019 at 11:05 am MST #231885StarTrekDocParticipantStatus: PhysicianPosts: 2055Joined: 01/15/2017
529s should be viewed as an asset split between your child (liability – accounts payable) and yourself (equity). The vast of majority of the asset will be offset by the liability side since from an expected value perspective it’s expected that this will go to your child. Of course situations exist whereby a scholarship occurs or the child doesn’t go to college. To the extent that this is possible the current assets should be discounted to that likelihood as well as the tax hit and this will be your equity (net worth). On your child’s balance sheet they have an accounts receivable and equity. It’s a bit ridiculous IMO to boast a net worth of X+Y when there is little expectation that you’ll have claim to Y in the future, despite the fact that you legally own it. That may make you feel better keeping it on your net worth as 100% equity, but it doesn’t speak to the reality of the situation.Click to expand…
I agree with this. If adding your 529 account value (and that of the resale value your baby grand piano) to your NW makes you feel better, by all means do so. Just do not expect it to be usable money for other purposes. Actually, ten years from now, I am more likely to have monetized the value of the baby grand than the 529 for personal use, so perhaps the baby grand should be included in my net worth.Click to expand…
Not disagreeing that certain items within one’s net worth is difficult to monetize. Nevertheless, it is part of NW. A $8M Picasso may be pretty hard to move in a day, but it’s still part of that person’s NW as is that Baby Grand and that 20 year beater car. They are all assets and part of NW.
Again, using NW as part of one’s retirement planning is using the wrong financial tool for the wrong purpose. It’s a good tool to assess one’s entire estate, but is a poor marker for one’s retirement planning. eg: Single life pension plan has no part of NW yet can play a significant portion of one’s retirement plan.
Once we start parsing out what the definition of NW is, then it’s not really NW anymore. It’s like my PT isn’t your PT or the other’s PT values. INR finally resolved this. Common lexicon matters.