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  • Avatar boogiba 
    Participant
    Status: Other Professional
    Posts: 6
    Joined: 02/18/2016

    I have been trying to rationalize the benefits to using a 529 for private K-12 eduction as well. I live in Michigan, where contributions up to $10k are deductible from state income tax. I am already contributing up to deductible limit with the intent to use for college expenses, so any additional contributions for K-12 expenses would not be deductible. The returns on the contributions would still be sheltered from federal and state income tax, but it seems like the age old advice to not invest money you may need in the next year rules in this case.

    I suppose that one might be able to realize enough tax sheltered capital gains over 5-10 years to make it worth the effort for paying for private high school expenses, assuming that your kids like mine are just starting their K-12 education. The biggest beneficiaries seem to be individuals who were not maximizing their contributions to their 529 plans, but were also paying for private education. In that case, in a state with income tax and a deduction available, it is a no brainer.

    I have 4 kids, so maybe it does make sense for me to start contributing above the $10k deductible limit. If the account values appear to be greater than what would be anticipated for college expenses, then I could use them for private high school expenses and take advantage of what will hopefully be a large sum of tax sheltered gains on the contributions. You could also invest in a safer 529 investment option so you don’t worry about a decrease in your principle contribution amount, but then the benefits may not outweigh the drawbacks.

    Any other suggestions?

    in reply to: 529 for K-12 #96186 Reply
    Avatar boogiba 
    Participant
    Status: Other Professional
    Posts: 6
    Joined: 02/18/2016

    I ran some calculations on my sweet spot range and it was only from $555,200 to $569,500. The tax savings for $14,000 hardly seem the effort required to try and plan income for the next year, and since it is so small I could very well miss it anyway.

    in reply to: What Income is my AMT sweet spot? #17997 Reply
    Avatar boogiba 
    Participant
    Status: Other Professional
    Posts: 6
    Joined: 02/18/2016

    Any thoughts on this article:¬†http://thefinancebuff.com/hsa-money-cover-expenses-now-or-let-it-grow.html? My wife’s currently employer sponsored HSA is through Wells Fargo and I have been debating switching to a new administrator. If we would primarily draw down on the account as expenses are incurred I would more likely consider something like Lake Michigan Credit Union with a higher baseline interest rate, however, if we plan to use it as a retirement savings vehicle HSA Bank seems like a good option for long term investing. Is there a real concern about being able to prove these expenses 30+ years down the road? Is saving medical invoices/receipts and year end tax filings adequate proof? That ends up being a lot of paperwork after 30 years.

    in reply to: Use HSA funds versus paying cash and allowing HSA to grow #15636 Reply
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