Shortly after each of your grandchildren was born, you would start a 529 account in each one’s name, making modest additions to those accounts every year on their birthdays. Their parents also contributed, and those accounts ended up being a big help to your grandkids (the youngest is still now in school), helping fund “extras” that are really necessities, such as laptops and other electronics and special workshops.
Both of you are now fully retired, (and, along with every else, are feeling the squeeze of rising costs). Still, you went ahead and opened a 529 account for the one great-grandson with $16,000, and with twin granddaughters on the way, plan to continue the tradition (if the twins arrive in 2024, the amount will be $18,000 each). Meanwhile, talking about college funding has caused you to focus on your own cash flow, and you have been attending a number of financial seminars.
One topic that was covered was, in fact, 529 plans for grandchildren. You learned that, as of this very year, assuming you name yourselves as owners of the 529 plan (with the grandchild as the beneficiary), you can maintain control of the account without affecting the grandchild’s ability to qualify for financial aid. Later, if there is unspent money in the account, you would be able to use that money yourselves by rolling it over into a Roth IRA.
Despite the new flexibility of 529 accounts, you are still faced with deciding what monies to use for the contributions. You have a systematic withdrawal plan set up on your joint investment account and on each of your retirement accounts; funding three new 529 accounts in one calendar year might prove a “push”. In the early years of retirement, you totally remodeled your home, taking out a home equity line of credit which is now almost paid off, and you could use that for funding the new education accounts.
Consider a different way to use your housing wealth. Using a reverse mortgage line of credit, you can finish paying off the existing credit, avoid tapping your investment and retirement accounts while using tax-free* withdrawals to fund the two new 529 accounts. With no requirement to make monthly mortgage payments,** you’ll be using your own equity to fund your great-grandkids’ future needs – and possibly your own needs later on.
https://mutualreverse.com/david-garrison
Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).
*Please consult a tax specialist. **Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to:www.nmlsconsumeraccess.org Equal Housing Lender