Comments on: Roth IRA For Your Kids’ College Savings | A Hybrid Approach http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/ Frugal, Simple, Debt-Free Living, and Generous Giving Sat, 11 Feb 2012 21:06:49 +0000 hourly 1 http://wordpress.org/?v= By: Elle http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-16208 Elle Sat, 28 Jan 2012 01:23:45 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-16208 I'm sorry, but I totally disagree that you're "hiding" money when you keep your money in the Roth IRA. It's completely legal, it's MY money (that God has given me to steward, of course) until I decide what to do with it. Why should I allow MY assets to affect my child's ability to get student loans--when they are in fact, still MY assets and not theirs? If I want to let my children get student loans, then give them the money from MY assets to pay it off after college, what business is that of the government, or anyone else for that matter??? It could reasonably be argued that this is good stewardship! As a matter of fact, the idea is brilliant and I intend to do just that, unless the rules change in the 10 years until my first child goes to college. Brilliant. I’m sorry, but I totally disagree that you’re “hiding” money when you keep your money in the Roth IRA. It’s completely legal, it’s MY money (that God has given me to steward, of course) until I decide what to do with it. Why should I allow MY assets to affect my child’s ability to get student loans–when they are in fact, still MY assets and not theirs? If I want to let my children get student loans, then give them the money from MY assets to pay it off after college, what business is that of the government, or anyone else for that matter??? It could reasonably be argued that this is good stewardship! As a matter of fact, the idea is brilliant and I intend to do just that, unless the rules change in the 10 years until my first child goes to college. Brilliant.

]]> By: Craig Ford http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-15681 Craig Ford Sat, 19 Nov 2011 05:37:43 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-15681 You cannot contribute more to a Roth than your earned income. If you get a gift and you have no earned income that cannot be contributed to a Roth. You cannot contribute more to a Roth than your earned income. If you get a gift and you have no earned income that cannot be contributed to a Roth.

]]> By: mj http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-15674 mj Fri, 18 Nov 2011 13:47:51 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-15674 Could ROTH IRA be funded form UN-Earned (Gift money for one..). All I read is Roth account could be only be funded by EARNED money. Please correct if I am wrong. Thanks. Could ROTH IRA be funded form UN-Earned (Gift money for one..).

All I read is Roth account could be only be funded by EARNED money. Please correct if I am wrong. Thanks.

]]> By: College Students and Smart Money Management http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-15394 College Students and Smart Money Management Mon, 10 Oct 2011 12:31:23 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-15394 [...] of credit and how to use it, and planning how to pay for college. For example, one way is to use a Roth IRA for college savings. The lessons are sponsored by The Allstate Foundation and can serve as a great learning tool for [...] [...] of credit and how to use it, and planning how to pay for college. For example, one way is to use a Roth IRA for college savings. The lessons are sponsored by The Allstate Foundation and can serve as a great learning tool for [...]

]]> By: Dale http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-15139 Dale Sun, 21 Aug 2011 14:41:13 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-15139 Hi Aileen, The guaranteed payout plans offered today by many banks and private companies, especially Gerber Life College Plan, are good, bad, and ugly all at the same time. Do you have a savings account tied to your car insurance? Do you have a savings account tied to your cell phone insurance? Do you have a savings account tied to your home insurance? I am going to assume not. Then, why would you want to have a savings account tied to a life insurance policy? Think about this for a moment. Gerber Life College plan is an endowment life insurance policy. You pay premiums for life insurance coverage and then a portion to your childs education account. They take that whole premium and place it in a growth mutual fund and hedge the risk of you dying in the next 10 - 20 years so they end up earning roughly 10%-20% percent return on your yearly premium. Then, they give you, on average, 1-5% gauranteed return on your funds. The only way your child will actually make out in the deal is if you die prematurely and their guardian invests the full death benefit for the remainder of time before they go to college. Second, the Gerber life college plan is only good for one child. If you have three children it is three premiums and three plans. If you can find a good Brokerage ROTH IRA account it would be a good idea to possibly save for your childrens education. But, a normal Roth IRA will earn the same amount of interest as the Gerber Life College Plan...1-5%. Sure, your child may get a scholarship, you might work at a colege and they get to go to school for free, maybe they get a partial scholarship. We just don't know what will happen 10-20 years from now. What I do know is the rate of inflation, on average, for the next 10-20 years is going to be 4% roughly every year. Which means 40-80% increase in college costs from current prices. Average college cost in this country is $36,000 per year ($36,000*4 years = $144,000 for four years of school- principal balance). $144,000*1.80 = $259,200. Any guaranteed plan will give you a max of possibly $150,000 (Gerber Life College Plan). You will be able to pay about half of their education. That is good right? You helped them immensely. As for me, I would rather invest half the amount needed to invest in a guaranteed plan in the same vehicles they would be investing within (growth mutual funds) earn 6-12% myself, and have $200,000-$500,000 ready for if and when my children want to attend college. If they don't attend college...more for me and my retirement account. If you have three children you will need an estimated $780,000 for all three childrens education needs (assuming they all go to college) 20 years from now. $50,000 per child will not even make a dent in their payments. Hi Aileen,

The guaranteed payout plans offered today by many banks and private companies, especially Gerber Life College Plan, are good, bad, and ugly all at the same time.

Do you have a savings account tied to your car insurance? Do you have a savings account tied to your cell phone insurance? Do you have a savings account tied to your home insurance? I am going to assume not. Then, why would you want to have a savings account tied to a life insurance policy?

Think about this for a moment. Gerber Life College plan is an endowment life insurance policy. You pay premiums for life insurance coverage and then a portion to your childs education account. They take that whole premium and place it in a growth mutual fund and hedge the risk of you dying in the next 10 – 20 years so they end up earning roughly 10%-20% percent return on your yearly premium. Then, they give you, on average, 1-5% gauranteed return on your funds. The only way your child will actually make out in the deal is if you die prematurely and their guardian invests the full death benefit for the remainder of time before they go to college.

Second, the Gerber life college plan is only good for one child. If you have three children it is three premiums and three plans.

If you can find a good Brokerage ROTH IRA account it would be a good idea to possibly save for your childrens education. But, a normal Roth IRA will earn the same amount of interest as the Gerber Life College Plan…1-5%.

Sure, your child may get a scholarship, you might work at a colege and they get to go to school for free, maybe they get a partial scholarship. We just don’t know what will happen 10-20 years from now.

What I do know is the rate of inflation, on average, for the next 10-20 years is going to be 4% roughly every year. Which means 40-80% increase in college costs from current prices. Average college cost in this country is $36,000 per year ($36,000*4 years = $144,000 for four years of school- principal balance). $144,000*1.80 = $259,200.

Any guaranteed plan will give you a max of possibly $150,000 (Gerber Life College Plan). You will be able to pay about half of their education. That is good right? You helped them immensely.

As for me, I would rather invest half the amount needed to invest in a guaranteed plan in the same vehicles they would be investing within (growth mutual funds) earn 6-12% myself, and have $200,000-$500,000 ready for if and when my children want to attend college. If they don’t attend college…more for me and my retirement account.

If you have three children you will need an estimated $780,000 for all three childrens education needs (assuming they all go to college) 20 years from now. $50,000 per child will not even make a dent in their payments.

]]> By: The Best of the Best in Money and Personal Finance #8 « Len Penzo dot Com http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-13914 The Best of the Best in Money and Personal Finance #8 « Len Penzo dot Com Tue, 22 Feb 2011 02:11:51 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-13914 [...] has put together an excellent review of Roth IRA and Roth IRA college savings distributions.  The article also includes a very easy to understand flowchart to help you [...] [...] has put together an excellent review of Roth IRA and Roth IRA college savings distributions.  The article also includes a very easy to understand flowchart to help you [...]

]]> By: Aileen http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-13808 Aileen Fri, 11 Feb 2011 20:06:55 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-13808 I hear more and more people are reluctant to open college savings accounts because tying your savings to the stock market proved risky. If your kid won't go to college for another 10-15 years, who knows what will happen by then to the money that was put aside and then invested. How good or bad of an investment are the guaranteed payout types of plan offered today by many banks or private companies (e.g. Gerber Life college plan)? Maybe the interest rate isn't too appealing but at least you can be certain of what amount you will withdraw when it's time. I hear more and more people are reluctant to open college savings accounts because tying your savings to the stock market proved risky. If your kid won’t go to college for another 10-15 years, who knows what will happen by then to the money that was put aside and then invested. How good or bad of an investment are the guaranteed payout types of plan offered today by many banks or private companies (e.g. Gerber Life college plan)? Maybe the interest rate isn’t too appealing but at least you can be certain of what amount you will withdraw when it’s time.

]]> By: Overlooked Tax Consequences of Converting Traditional IRA to Roth in 2010 and Beyond http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-13186 Overlooked Tax Consequences of Converting Traditional IRA to Roth in 2010 and Beyond Thu, 06 Jan 2011 18:52:43 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-13186 [...] Roth IRA college savings is another approach you can take that actually DOES make sense if you are interested in the Roth. [...] [...] Roth IRA college savings is another approach you can take that actually DOES make sense if you are interested in the Roth. [...]

]]> By: Craig http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-9113 Craig Wed, 06 Oct 2010 01:46:47 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-9113 @Vasu You are exactly right that the Roth gives you many more investing options because you maintain control over the entire portfolio. While I don’t time the market you are correct that you can remove funds at any time you wish. Flexibility is the biggest advantage of a Roth. @Vasu
You are exactly right that the Roth gives you many more investing options because you maintain control over the entire portfolio. While I don’t time the market you are correct that you can remove funds at any time you wish. Flexibility is the biggest advantage of a Roth.

]]> By: Vasu http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/comment-page-1/#comment-9112 Vasu Wed, 06 Oct 2010 00:47:41 +0000 http://www.moneyhelpforchristians.com/roth-ira-to-save-for-your-kids-college-a-hybrid-approach/#comment-9112 ROTH IRA gives unlimited options in investing while 529 plan typically has only 5 or 10 options. Recently, lots of those options have been losing money. Another important disadvantage in 529 plan is that you can change the investment option only once in a year. If the stock market starts crashing, you cannot do anything until the end of the year. By then, the invested amount might lose heavily. What is your advice? ROTH IRA gives unlimited options in investing while 529 plan typically has only 5 or 10 options. Recently, lots of those options have been losing money. Another important disadvantage in 529 plan is that you can change the investment option only once in a year. If the stock market starts crashing, you cannot do anything until the end of the year. By then, the invested amount might lose heavily. What is your advice?

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