If you are expecting your first child you may be considering taking out a 529 plan, more so if it comes with a fee that is low and superb Vanguard options. But is it worth it?
One thing you might want to bear in mind as an alternative to the 529 plan is to just save up money in a savings account for education expenses for the kids. This way if they decided that they are not going to school you have flexibility of accessing the savings and using them for something else.
But does the growth of the 529 plan outweigh any negatives if the kids decided not to go to school?
Actually you could withdraw contributions to the 529 plan at any time and not have to face tax or penalties. The only thing that would be taxed is the gains that you made from your contributions.
If you have money saved in a bank savings account you would lose money thanks to the interest rates being low and inflation and this may mean that when you come to withdraw it 20 years of so later, the money may not be worth what you actually put into the account.
So you will have to balance up the fact of the chances of them not attending school with penalties if you use it for none education purposes.
