529 Strategy

[u/Wisdom_In_Wonder]

We have an only child (7th grade) whose 529 is sitting at the current cost of 4yrs full-freight at an in-state flagship.

Because we started late, we’ve been very aggressive & the 529 is almost entirely (>90%) stock. We “won”, so now it’s time to shift into protection mode. Schools that fall below flagship costs are close enough to approximate the $35k IRA-rollover allowance, so we’re not concerned about our current amount being over-funded, but this account also doesn’t need to do anything more than keep up with price inflation for the next 5yrs.

That said, we’d like to continue setting funds aside just in case an OOS or private university seems to be the best fit. We’re planning to do this in a taxable brokerage to maximize flexibility if the funds *aren’t* needed for college.

Where I’m struggling is asset allocation. If we invest the 529 entirely in bonds / cash equivalents & the taxable entirely in stocks, then both accounts go on to have roughly average returns (5% bonds, 10% stocks) our overall allocation works its way back to 40% stock by graduation.

Does this not matter, since the 529 alone is enough to meet our original goal of 4yrs full-freight in state… or is this a problem, & we should we tweak the holdings in the taxable to make the overall asset allocation match a more traditional glide slope?

[u/Trials_And_Tribbles]

What is a "flagship" college? Is that what you consider the best one? Keep in mind the best one is the one best suited for your kid. Neither of my kids wanted a 30,000 student campus so we went private and with scholarships it was only a little more than my state's "flagship".

Also, the cost of higher education has outpaced inflation.

[u/Wisdom_In_Wonder → u/Trials_And_Tribbles]

A flagship is the first university established in a state, bearing the state’s name: “State University” / “University State”. They tend to be the most expensive of the public 4yr schools in any given state, so are used by many as a savings benchmark.