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Ballet Talk for Dancers

College Savings shifting to Savings Account?


hersupport

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My dd is now a sophomore in high school and even more committed to dance. We have been saving every month since she was a baby for college but now it seems very possible she will postpone college to pursue a dance career. My husband and I are considering shifting the monthy contribution to a savings account that could help her out when she first leaves home to possible be a trainee (and not making money). Have any of you done this? We just never envisioned her not going straight to college until about a year ago. I would love to hear what others have done. We have enough in her college account to cover her taking one or two classes at a time to complete college while she dances.

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My sophomore DD is still planning on the college route, so we are still focused on college savings (529 accounts). We also have a son, so any non-used savings could be shifted over to him, if needed. The tax benefits of 529 accounts are too good for us to pass up.

However, with only two years to go, it shouldn't be a huge deal to shift savings from a college type account to another account type. Just be prepared for taxes, if there is any profit.

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Our 529 can be used for something like 30 years after it was established. We have decided to leave it alone for now so that DD has it when she DOES go to college. I would agree to ask your financial adviser.

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Just to clarify we are going to leave the money in her 529 account and let it be for now. Then all future contribution but in a different type of savings/investment account that she can access for other expenses.

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It makes sense to put some in regular savings. I would think of it as "diversification". If it were me, in this case, I would want about a third of the money outside the 529.

 

You could put it in a very liquid index fund and maybe earn 5-10% each year.

 

I would also investigate what else you can spend 529 money on. There could be more educational/vocational options than just college.

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hersupport,

That was my assumption - redirecting current savings, not pulling from the 529 account.

I took a quick look at the eligible institutions search list on SavingsforCollege and Joffrey Ballet School was listed as an eligible institution. It makes me wonder if other ballet schools that offer post-secondary training should also complete the paperwork to be consider an eligible institution.

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Thanks for the advice. We were caught a little bit off guard with my dd. I honestly did not think she would actually be able to pursue a dance career. I will have to look into other possible ways of using her 529. In the mean time I will talk to our financial adviser about where to place the monthly contribution. We are trying very hard to keep everything ballet related on a cash basis.

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One note on the 529 - your financial advisor can give you details, but my understanding is that the 10% penalty applies only to the interest portion of what you take out. You've already paid your income tax on the money you initially contributed. If you do withdraw the money for non-qualified expenses, my research shows that one would then be required to pay the penalty and income tax on the earnings portion. Definitely double-check with a financial planner, but thought I would just mention that possibility, for others who were considering how to approach the situation.

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