Contribution to 401k vs taking loan for kids college

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Admiral
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Re: Contribution to 401k vs taking loan for kids college

Post by Admiral »

wackerdr wrote: Thu Jun 01, 2023 6:45 pm
Admiral wrote: Thu Jun 01, 2023 6:37 pm
wackerdr wrote: Thu Jun 01, 2023 6:28 pm
Admiral wrote: Thu Jun 01, 2023 6:08 pm OP:

Why do you need (or think you need) $300k in a taxable account? If not for large expenses (read: college) what is this money for? As I noted upthread, I would either spend the money on education (which is a great investment) or get it into Roth ASAP and stop paying taxes on it. Or split the difference. Don't forget you can always pull contributions from Roth if necessary.

You've not adequately explained why taking a loan is preferable to paying for college with money you already have that is not tax-sheltered or reducing your taxable income but rather is adding to your taxable income.

In fact, you probably should max all pre-tax space, do backdoor Roth up to limit each year, and then use the taxable monies for any shortage in living expenses. Controlling cap gains is relatively easy.
I max out all pre-tax available for me . HSA, Fsa, 401k , are all contributed to allowed limits.

I never contributed Roth since it is post tax , and I prioritized comfort of having it on hand if needed. And secondly, I Dont think my post retirement tax rate would be so high as to take advantage of Roth contributed tax-free withdrawals . I think both could be flawed assumptions. Probably I don’t understand it completely.

Does Roth make sense in every scenario ?

When it comes to college funding, the only thing holding me back from selling is capital gains. All are in long term capital gain ( FBGRX and QQQ) , but need to check cost basis to see exact effect.

I am trying to understand if it is better off to take loan at 7 - 8% , and let brokerage grow and Make full 401k contributions, OR , reduce 401k and sell brokerage as needed. But as other have pointed out, I should be able to fund significant portion from cash flow.
Backdoor Roth has no income limitations. The point is this: taxable monies have tax drag, Roth monies do not. You've already paid income tax on the taxable account funds, so whatever your future tax rate is--higher or lower than today--is irrelevant. I’m not proposing you save directly into Roth instead of in pre-tax (you're above the phaseout anyway, unless you have a Roth option in your workplace plan). I'm proposing you transfer already taxed money. Big difference. You could easily be paying 2% of $300k in taxes each year.
I think I am understanding what you are saying. Thank you for highlighting it. It’s super helpful.

But to convert brokerage to IRA, I need to sell what I have in brokerage. Correct? That’s what I am reading, and it will have capital gains, . If this understanding is accurate , would it now offset any advantages of tax free withdrawals?
Correct you cannot make an in-kind transfer from a taxable account to a T-IRA (for purposes of Roth conversion). You'd have to liquidate the shares. You'd also need to roll your T-IRA into your workplace plan to avoid the pro-rata rule. It's still likely a good idea as there's not going to be a lot of cap gains tax due on whatever the gain portion of the $7k is (per year).

I suppose it all depends, as I said upthread, on the purpose of the taxable savings in the first place. I personally would never take a 7% loan just to save a little tax on selling stock. Taxable investing by definition always incurs some tax (unless you happen to be below the tax threshold, which you aren't.)
toddthebod
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Re: Contribution to 401k vs taking loan for kids college

Post by toddthebod »

dekecarver wrote: Fri Jun 02, 2023 6:32 am Another option that may be worth consideration:
Offer the kids to borrow the money from you and set up a loan repayment schedule. How that works out really depends on your kids and you in the end. Could be that you write it off one way or the other.

My family used this method and it worked for us, starting with my father and his parents; it was actually pretty cool to find and read the accounting ledger that he and my grandmother ran separately, and the bonus, lol, he received for paying back early, same for me.
Just another option.
That sounds like the worst of both worlds. He saddles his kids with debt and he has to cash flow.the tuition.
dekecarver
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Re: Contribution to 401k vs taking loan for kids college

Post by dekecarver »

toddthebod wrote: Fri Jun 02, 2023 7:35 am
dekecarver wrote: Fri Jun 02, 2023 6:32 am Another option that may be worth consideration:
Offer the kids to borrow the money from you and set up a loan repayment schedule. How that works out really depends on your kids and you in the end. Could be that you write it off one way or the other.

My family used this method and it worked for us, starting with my father and his parents; it was actually pretty cool to find and read the accounting ledger that he and my grandmother ran separately, and the bonus, lol, he received for paying back early, same for me.
Just another option.
That sounds like the worst of both worlds. He saddles his kids with debt and he has to cash flow.the tuition.
Not really; depends on the goal, objective and how you look at it in terms of expectations. Clearly not an option for some from a financial or philosophical perspective. As a parent you are paying or not paying one way or the other.
Chuck
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Re: Contribution to 401k vs taking loan for kids college

Post by Chuck »

I'm adapting a parallel concept from TFB's article about 401k loans, so credit where it is due... If a parent has retirement assets in "the financial system" and a child gets a loan from "the financial system," it's not fundamentally different from the parent simply loaning their retirement assets to their child. The risk profile is different, but if everything works out in the end, child gets a loan and a college degree, and parent gets a retirement.
Alfonsia
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Re: Contribution to 401k vs taking loan for kids college

Post by Alfonsia »

wackerdr wrote: Thu Jun 01, 2023 7:53 pm
lakpr wrote: Thu Jun 01, 2023 2:07 pm 55k per year sounds like zero financial aid, other than loans.

Curious: does your user handle mean you live in Chicago? And is your child going to Univ of Chicago?
Ya, Chicago based. My son is going to east coast. . Didn’t get into UIUC , and anything else was out of state. He isn’t of Univ of Chicago caliber, but from a cost point of view, it’s private and probably more expensive.
So the college is non discussable? There is no other instate option than these two rather selective schools? He is going to a school worth 55K? Which college is he going to?
Admiral
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Re: Contribution to 401k vs taking loan for kids college

Post by Admiral »

Alfonsia wrote: Fri Jun 02, 2023 2:28 pm
wackerdr wrote: Thu Jun 01, 2023 7:53 pm
lakpr wrote: Thu Jun 01, 2023 2:07 pm 55k per year sounds like zero financial aid, other than loans.

Curious: does your user handle mean you live in Chicago? And is your child going to Univ of Chicago?
Ya, Chicago based. My son is going to east coast. . Didn’t get into UIUC , and anything else was out of state. He isn’t of Univ of Chicago caliber, but from a cost point of view, it’s private and probably more expensive.
So the college is non discussable? There is no other instate option than these two rather selective schools? He is going to a school worth 55K? Which college is he going to?
IMO this is irrelevant. It's for the fall and the decision has already been made. "Worth" is subjective, let's not get sidetracked from the financial issues posed by the OP.
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wackerdr
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Re: Contribution to 401k vs taking loan for kids college

Post by wackerdr »

Alfonsia wrote: Fri Jun 02, 2023 2:28 pm
wackerdr wrote: Thu Jun 01, 2023 7:53 pm
lakpr wrote: Thu Jun 01, 2023 2:07 pm 55k per year sounds like zero financial aid, other than loans.

Curious: does your user handle mean you live in Chicago? And is your child going to Univ of Chicago?
Ya, Chicago based. My son is going to east coast. . Didn’t get into UIUC , and anything else was out of state. He isn’t of Univ of Chicago caliber, but from a cost point of view, it’s private and probably more expensive.
So the college is non discussable? There is no other instate option than these two rather selective schools? He is going to a school worth 55K? Which college is he going to?
You can discuss . We have made a decision and are happy with it.
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dogagility
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Re: Contribution to 401k vs taking loan for kids college

Post by dogagility »

wackerdr wrote: Fri Jun 02, 2023 2:33 pm You can discuss . We have made a decision and are happy with it.
And that is all that matters. :beer
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the_wiki
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Re: Contribution to 401k vs taking loan for kids college

Post by the_wiki »

dekecarver wrote: Fri Jun 02, 2023 6:32 am Another option that may be worth consideration:
Offer the kids to borrow the money from you and set up a loan repayment schedule. How that works out really depends on your kids and you in the end. Could be that you write it off one way or the other.

My family used this method and it worked for us, starting with my father and his parents; it was actually pretty cool to find and read the accounting ledger that he and my grandmother ran separately, and the bonus, lol, he received for paying back early, same for me.
Just another option.
How much did college cost then?

OP is looking at about a quarter million dollars.
dekecarver
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Re: Contribution to 401k vs taking loan for kids college

Post by dekecarver »

the_wiki wrote: Fri Jun 02, 2023 4:33 pm
dekecarver wrote: Fri Jun 02, 2023 6:32 am Another option that may be worth consideration:
Offer the kids to borrow the money from you and set up a loan repayment schedule. How that works out really depends on your kids and you in the end. Could be that you write it off one way or the other.

My family used this method and it worked for us, starting with my father and his parents; it was actually pretty cool to find and read the accounting ledger that he and my grandmother ran separately, and the bonus, lol, he received for paying back early, same for me.
Just another option.
How much did college cost then?

OP is looking at about a quarter million dollars.
What college cost then, and now is all relative. A quarter of a million is nothing more than $50k+ year for the typically 5 year plan for a lot of schools; $25/hr full time is $50k yada yada. IMO what's more important is the ROI based on the cost of the education and earnings potential. Ex: 2 to 3 yr nsg degree at the local community college, at $6k/year, puts a new nurse into a $85k base salary year job and throw in OT they are making $100K/yr or more. Tack on certifications/few years of experience and looking at $100K-$150K/yr. Not bad for a 3 year degree that cost $18-20K total give or take. Then open up the options with advanced degree or crossover career. Same degree from Yale or Georgetown isn't going to increase your salary although the cost is going up tremendously. This doesn't apply to all professions but is applicable to many.

IMO, no problem with a kid having some skin in the game and paying back a parent. True, that is not for everyone; I think some parents just feel guilty if they don't foot the bill free and clean, and IMO some kids expect the parent to do so, good for them.
the_wiki
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Re: Contribution to 401k vs taking loan for kids college

Post by the_wiki »

dekecarver wrote: Fri Jun 02, 2023 9:39 pm
the_wiki wrote: Fri Jun 02, 2023 4:33 pm
dekecarver wrote: Fri Jun 02, 2023 6:32 am Another option that may be worth consideration:
Offer the kids to borrow the money from you and set up a loan repayment schedule. How that works out really depends on your kids and you in the end. Could be that you write it off one way or the other.

My family used this method and it worked for us, starting with my father and his parents; it was actually pretty cool to find and read the accounting ledger that he and my grandmother ran separately, and the bonus, lol, he received for paying back early, same for me.
Just another option.
How much did college cost then?

OP is looking at about a quarter million dollars.
What college cost then, and now is all relative.
It would be relative if college costs hadn't outpaced inflation by so much over the past few decades. If we kept things perfectly relative to people in their 60s, college costs would be 1/4 to 1/3 as much as they are now. And if we did the same for those in their 40s, it would be about 1/2 as much. Kids today (and their parents) are getting a much worse deal.


I'm not against kids having "some skin in the game". But when the game is a 50% of your future take home pay for 10+ years, that seems pretty rough. You'll never be able to start a real life with that anchor. I already said earlier I think the tuition mentioned in the OP is way too much. but being what it is, it would be criminal to saddle your kid with that kind of burden.
HomeStretch
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Re: Contribution to 401k vs taking loan for kids college

Post by HomeStretch »

Contribute $10k per year to the Illinois 529 plan. The contribution is deductible on your state tax return. It looks like the Plan will allow you to immediately withdraw contributions for qualified education expenses so you can cash flow $10k in/out of the 529 account (double check this).

State income tax rate of 4.95% x 8 years of $10k/yr contributions = $3,960 in tax savings that will help pay college costs.
HomeStretch
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Re: Contribution to 401k vs taking loan for kids college

Post by HomeStretch »

wackerdr wrote: Thu Jun 01, 2023 12:43 pm … (B)My expenses have been about 8.5k - 9k a month including mortgage and property taxes.

(C) After contributing full 401k, full HSA, I am typically left with 15k - 20k a year. There may be expense creep or leakage , which I should look at closely.

I will post a separate thread asking for guidance on spend management. …
Before you create a separate thread about expenses, double-check that your monthly spend rate of $8.5k-$9k includes all expenses (I don’t think it does) such as payroll/income taxes, healthcare premiums paid by payroll deduction, periodic expenses such as a new car or major home repair. If you are withdrawing HSA and FSA funds to pay annual healthcare expenses, that needs to be added into your expenses too. It’s not part of your annual savings unless you are holding all HSA funds unspent until retirement.

Per your posts:
- your annual gross salary is $220k + 5-10% bonus = $231k-$242k in gross W-2 income.

- you are contributing $30k to 401k. How much are you contributing to HSA annually and are you saving or spending that money? The FSA contributions have to be spent (or forfeited) so that’s part of spending.

- you have $15k-$20k leftover after all spending and savings.

- excluding the HSA, that says your total spending is really $181k - $197k as compared to the $102k-$108k you posted.

Likely a large part of the annual spending difference is payroll/income taxes and healthcare premiums (and FSA/maybe HSA deductions) deducted from your paycheck. But nail this down before creating another post about spending in order to have the best discussion about it.
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wackerdr
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Re: Contribution to 401k vs taking loan for kids college

Post by wackerdr »

HomeStretch wrote: Sat Jun 03, 2023 5:38 am
wackerdr wrote: Thu Jun 01, 2023 12:43 pm … (B)My expenses have been about 8.5k - 9k a month including mortgage and property taxes.

(C) After contributing full 401k, full HSA, I am typically left with 15k - 20k a year. There may be expense creep or leakage , which I should look at closely.

I will post a separate thread asking for guidance on spend management. …
Before you create a separate thread about expenses, double-check that your monthly spend rate of $8.5k-$9k includes all expenses (I don’t think it does) such as payroll/income taxes, healthcare premiums paid by payroll deduction, periodic expenses such as a new car or major home repair. If you are withdrawing HSA and FSA funds to pay annual healthcare expenses, that needs to be added into your expenses too. It’s not part of your annual savings unless you are holding all HSA funds unspent until retirement.

Per your posts:
- your annual gross salary is $220k + 5-10% bonus = $231k-$242k in gross W-2 income.

- you are contributing $30k to 401k. How much are you contributing to HSA annually and are you saving or spending that money? The FSA contributions have to be spent (or forfeited) so that’s part of spending.

- you have $15k-$20k leftover after all spending and savings.

- excluding the HSA, that says your total spending is really $181k - $197k as compared to the $102k-$108k you posted.

Likely a large part of the annual spending difference is payroll/income taxes and healthcare premiums (and FSA/maybe HSA deductions) deducted from your paycheck. But nail this down before creating another post about spending in order to have the best discussion about it.
By spend, I mean spending from post-tax take-home pay. My contributions between FSA, HSA and 401k are all maximized are about 40K. Then there is health insurance and life insurance that gets deducted from payroll.

I do everything I know to reduce the taxable income. I spend 9K on average every month . My mortgage + property taxes + insurance + utilities is 2,500.

Considering there are no car payments or child care expenses , there is a significant discretionary spend that is happening. That’s what I have been looking at closely since I opened this thread. It appears a lot of small things add up, and couple of intentional travels that happen every year.
Last edited by wackerdr on Sat Jun 03, 2023 8:49 am, edited 2 times in total.
stoptothink
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Re: Contribution to 401k vs taking loan for kids college

Post by stoptothink »

TomatoTomahto wrote: Thu Jun 01, 2023 1:52 pm
stoptothink wrote: Thu Jun 01, 2023 1:25 pm
TomatoTomahto wrote: Thu Jun 01, 2023 10:41 am
toddthebod wrote: Thu Jun 01, 2023 8:36 am You can borrow for college. You can't borrow for retirement.
This oft-repeated mantra has one problem: you can usually delay retirement but college is generally on a timetable.
How so? Walk around any college campus and you'll see plenty of undergrads not in the 17-22 age range and the reasons are many (late bloomers, went to work directly out of high school, employer paying for a degree, military, etc.). But, many of the people I know who are retired did not have the choice of doing it on their timeline (ie. they became physically incapable of continuing to work, were let-go and unable to find something else, etc.). Would seem to be that the college timeline is generally more flexible than the retirement one, unless you are wealthy.
One of mine was what is euphemistically called a “non-traditional” student. He did the community college thing while working as an EMT and finally became a full time student. His reasons were his own, and were not related to our ability to fund things. As far as I’m concerned, it was a significant (self-imposed) handicap.

But, all’s well that ends well.
Would seem that your own experience invalidates your statement :confused
Chadnudj
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Re: Contribution to 401k vs taking loan for kids college

Post by Chadnudj »

ruralavalon wrote: Thu Jun 01, 2023 10:42 am
You could consider withdrawing from the "300k in brokerage", rather than either reducing 401k contributions or taking out loans.

That was my immediate thought as well. Even with no growth, that brokerage amount could get the first kid all the way through college and probably the second kid halfway through (if not all the way through) if there's growth on the balance. Selling those shares at long term capital gains rates would be tax preferential, as would maintaining your maxing out the 401k during the interim.

I'd also encourage you to have you kids put some "skin in the game" in terms of loans, even if it's just the small, basic federal government loans that have interest deferred until graduation. Graduating with ~$25k in loans isn't bad, and makes them know how much you sacrificed to pay for the rest. And you can always "gift" them the amounts to pay that off later (or as a graduation gift).

Whatever you do, continue to get the maximum match in your 401k -- that's free money. And I'd suggest tightening up the rest of your spending to cashflow college as much as you can, rather than cut your 401k contributions, etc.
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TomatoTomahto
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Re: Contribution to 401k vs taking loan for kids college

Post by TomatoTomahto »

stoptothink wrote: Sat Jun 03, 2023 8:44 am
TomatoTomahto wrote: Thu Jun 01, 2023 1:52 pm
stoptothink wrote: Thu Jun 01, 2023 1:25 pm
TomatoTomahto wrote: Thu Jun 01, 2023 10:41 am
toddthebod wrote: Thu Jun 01, 2023 8:36 am You can borrow for college. You can't borrow for retirement.
This oft-repeated mantra has one problem: you can usually delay retirement but college is generally on a timetable.
How so? Walk around any college campus and you'll see plenty of undergrads not in the 17-22 age range and the reasons are many (late bloomers, went to work directly out of high school, employer paying for a degree, military, etc.). But, many of the people I know who are retired did not have the choice of doing it on their timeline (ie. they became physically incapable of continuing to work, were let-go and unable to find something else, etc.). Would seem to be that the college timeline is generally more flexible than the retirement one, unless you are wealthy.
One of mine was what is euphemistically called a “non-traditional” student. He did the community college thing while working as an EMT and finally became a full time student. His reasons were his own, and were not related to our ability to fund things. As far as I’m concerned, it was a significant (self-imposed) handicap.

But, all’s well that ends well.
Would seem that your own experience invalidates your statement :confused
I don’t think that we had to have as much stress in his life, my life, expense, etc. if he had done a more traditional path. There were some points where it was only our (non-religious) faith that got us through. Unnecessary wear and tear. I am glad that’s now in the rear view mirror.
I get the FI part but not the RE part of FIRE.
MathWizard
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Re: Contribution to 401k vs taking loan for kids college

Post by MathWizard »

Maybe too late, but assuming you live in Illinois, the state has reciprocity with some neighboring states. Has this been considered?

Univ of Wisconsin, Madison is a good school. U of Iowa would be close to UIUC,or Iowa State Univ of he is looking at engineering. A nephew went there in CS, and is doing very well.

I don't know if Illinois has reciprocity with Minn,but the U of Minn is also a very good school. I don't know much about Kentucky schools.
MBB_Boy
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Re: Contribution to 401k vs taking loan for kids college

Post by MBB_Boy »

Chadnudj wrote: Sat Jun 03, 2023 8:46 am
ruralavalon wrote: Thu Jun 01, 2023 10:42 am
You could consider withdrawing from the "300k in brokerage", rather than either reducing 401k contributions or taking out loans.

That was my immediate thought as well. Even with no growth, that brokerage amount could get the first kid all the way through college and probably the second kid halfway through (if not all the way through) if there's growth on the balance. Selling those shares at long term capital gains rates would be tax preferential, as would maintaining your maxing out the 401k during the interim.

I'd also encourage you to have you kids put some "skin in the game" in terms of loans, even if it's just the small, basic federal government loans that have interest deferred until graduation. Graduating with ~$25k in loans isn't bad, and makes them know how much you sacrificed to pay for the rest. And you can always "gift" them the amounts to pay that off later (or as a graduation gift).

Whatever you do, continue to get the maximum match in your 401k -- that's free money. And I'd suggest tightening up the rest of your spending to cashflow college as much as you can, rather than cut your 401k contributions, etc.
Taking loans just to have "skin in the game" is silly. There are other ways to have skin the game, the simplest being working during the summers and using that to pay part of your way. And there's no good reason they can't work during school - there is plenty of free time and plenty of simple on-campus jobs. I went to an elite university, double majored, was an athlete and captain of my team, and was able to hold down 5-10 hours a week working at the athletic complex. Even with no skills - it's very easy to work the front desk or check out basketballs at the equipment window. Mine was a skilled position related to my sport, so paid much better
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dogagility
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Re: Contribution to 401k vs taking loan for kids college

Post by dogagility »

wackerdr wrote: Sat Jun 03, 2023 8:36 am Considering there are no car payments or child care expenses , there is a significant discretionary spend that is happening. That’s what I have been looking at closely since I opened this thread. It appears a lot of small things add up, and couple of intentional travels that happen every year.
I think you'll be able to cash flow your college expenses and keep maxing out your retirement accounts. You'll just need to prioritize college over your discretionary spend.

I also like another poster's idea to make the maximum state deductible 529 contribution each year.
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Chadnudj
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Re: Contribution to 401k vs taking loan for kids college

Post by Chadnudj »

MBB_Boy wrote: Sat Jun 03, 2023 12:06 pm
Chadnudj wrote: Sat Jun 03, 2023 8:46 am
ruralavalon wrote: Thu Jun 01, 2023 10:42 am
You could consider withdrawing from the "300k in brokerage", rather than either reducing 401k contributions or taking out loans.

That was my immediate thought as well. Even with no growth, that brokerage amount could get the first kid all the way through college and probably the second kid halfway through (if not all the way through) if there's growth on the balance. Selling those shares at long term capital gains rates would be tax preferential, as would maintaining your maxing out the 401k during the interim.

I'd also encourage you to have you kids put some "skin in the game" in terms of loans, even if it's just the small, basic federal government loans that have interest deferred until graduation. Graduating with ~$25k in loans isn't bad, and makes them know how much you sacrificed to pay for the rest. And you can always "gift" them the amounts to pay that off later (or as a graduation gift).

Whatever you do, continue to get the maximum match in your 401k -- that's free money. And I'd suggest tightening up the rest of your spending to cashflow college as much as you can, rather than cut your 401k contributions, etc.
Taking loans just to have "skin in the game" is silly. There are other ways to have skin the game, the simplest being working during the summers and using that to pay part of your way. And there's no good reason they can't work during school - there is plenty of free time and plenty of simple on-campus jobs. I went to an elite university, double majored, was an athlete and captain of my team, and was able to hold down 5-10 hours a week working at the athletic complex. Even with no skills - it's very easy to work the front desk or check out basketballs at the equipment window. Mine was a skilled position related to my sport, so paid much better
And that's fine....for you. OP's children may not be eligible for work-study (many jobs are only open to those eligible for work-study), or OP/his kids may believe (correctly in some, but not all, cases) that the main job as a student is to study/in the summers is to do internships to get you towards a paying career, and that part-time/summer jobs interfere with that. (FWIW, I am with you -- I always had paying jobs as a student/in summers).

My point (which I admit I didn't put as articulately as I should) was that having your kids have some skin in the game in some form is not a bad thing, and that loans (while not ideal) can be one way to give them some of that responsibility.
nolesrule
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Re: Contribution to 401k vs taking loan for kids college

Post by nolesrule »

lakpr wrote: Thu Jun 01, 2023 2:07 pm 55k per year sounds like zero financial aid, other than loans.

Why not split the $300k in brokerage account into two, transfer the $150k to the child's name (he/she is now legally an adult, right?), then have them use the $150k to pay for the school tuition on their own? Should cover 3 years worth of college.

With little to no other expected income, they will be able to realize up to $40k in capital gains and pay zero tax on it. They will also be able to truthfully claim they are NOT claimed as a dependent on someone else's return (they are using their own money). No implications on financial aid, there wasn't any to begin with.

YOU, will just have to file a Form 709 for the $150k gift to your child.

Curious: does your user handle mean you live in Chicago? And is your child going to Univ of Chicago?

edited to add: The student should have at certain amount of earned income to be claimed as a non-dependent for my above scheme to work ( I believe it is $4,400 for 2023? Need to look that up); which is a fairly low bar I think if your kid can get a part time job on campus. I realize it may not be possible for THIS year, but perhaps for 2024 and beyond?
Kiddie tax rules on unearned income apply to full time college students under the age of 24 unless they are providing at least half their own support. I don't think you can bypass this by gifting them investments that they then sell for their own support.
lakpr
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Re: Contribution to 401k vs taking loan for kids college

Post by lakpr »

nolesrule wrote: Mon Jun 12, 2023 10:58 am Kiddie tax rules on unearned income apply to full time college students under the age of 24 unless they are providing at least half their own support. I don't think you can bypass this by gifting them investments that they then sell for their own support.
Doesn’t selling own investments paying for own support count as “at least half their own support”?
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