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Post by Darcy Collins on Jan 20, 2015 22:19:45 GMT
Did anyone else see this gem in the White House's leak of the President's proposals in the state of the Union address? Withdrawals from 529 plans - even if used for college tuition will be taxed at full income tax rates. What the hell?!?! That's seriously screwed up. I find changes to existing plans especially egregious. We put money aside under the existing laws - to not only take away the benefit of being tax free to pay for college - but dramatically increase the taxes is ridiculous. We would have been way better off putting it into an account and paying capital gains rates than into an account to then pay income taxes. Glad it has zero chance of passing - but certainly shows the president's love for the middle class. www.forbes.com/sites/ryanellis/2015/01/19/obamas-new-state-of-the-union-tax-hike-on-middle-class-529-college-savers/ |
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Deleted
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May 15, 2024 18:32:15 GMT
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Post by Deleted on Jan 20, 2015 22:27:24 GMT
What? Way to throw middle-class college savers under the bus!
Maybe this is how the administration is planning to pay for everyone's 2-yr community college tuition?
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pudgygroundhog
Pearl Clutcher
Posts: 4,643 
Location: The Grand Canyon
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Post by pudgygroundhog on Jan 20, 2015 22:29:17 GMT
One article in the WSJ said that previous contributions won't be affected, but who knows. I agree that changing terms to existing plans is BS. Seems like such a weird thing to target. Why discourage people from saving? NY State allows contributions to be deducted from state taxes, but if that changes too, there would be zero reason for us to invest in a 529.
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back to *pea*ality
Pearl Clutcher
Not my circus, not my monkeys ~refugee pea #59
Posts: 3,149
Jun 25, 2014 19:51:11 GMT
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Post by back to *pea*ality on Jan 20, 2015 22:33:09 GMT
I had not heard this.
It seems counter-intuitive to punish people who work hard and try to do the right thing by putting as much away as they can to help their kids get an education.
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Post by sugarmama on Jan 20, 2015 22:41:54 GMT
That's what we get with all the "FREE" stuff--more taxes! The first thing I thought when I heard about his community college plan, was that there had to be a catch.
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Post by scraphop on Jan 20, 2015 22:41:54 GMT
In my opinion most of our tax laws discourage saving. You don't get much tax savings for IRA contributions to make them worthwhile. Sec 179 depreciation rules encourage small businesses to take on more debt than they can afford to avoid paying taxes. Estate taxes basically tax the same assets twice. You paid taxes when the money was earned to buy the assets in the estate and potentially pay on those same assets when you die. Nicksmom is probably right -- the 2 year tuition money has to come from somewhere. Why not put it on the folks that have sacrificed to put money into their own children's college plan.
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Post by hop2 on Jan 20, 2015 22:44:43 GMT
What would be the Point of having a 529 then??? If there aren't tax benefits then just invest the money.
And this administration has never once considered the impact a policy has on the middle class why would you expect them to now?
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Post by Darcy Collins on Jan 20, 2015 22:50:39 GMT
One article in the WSJ said that previous contributions won't be affected, but who knows. I agree that changing terms to existing plans is BS. Seems like such a weird thing to target. Why discourage people from saving? NY State allows contributions to be deducted from state taxes, but if that changes too, there would be zero reason for us to invest in a 529. I suppose we'll have to see the full proposal to see how existing plans will be treated. It essentially makes 529 plans worthless and no one would use them - resulting in no actual money going to the treasury if only applied to new contributions. It essentially just kills a vehicle for middle class families to catch a small break on saving for their kids' college. I find it bizarre that this some how helps the Democratic party in 2016 - which is all this speech is about anyway. |
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peabay
Prolific Pea
Posts: 9,612
Jun 25, 2014 19:50:41 GMT
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Post by peabay on Jan 20, 2015 22:53:04 GMT
Big fat old liberal here who really doesn't like this proposal. Where, oh, where are the fiscal moderates/social liberals? And why aren't they running for office?
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Post by sugarmama on Jan 20, 2015 23:09:15 GMT
wish we could funnel all the lobbyists $$$ into these plans! LOL
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Post by hop2 on Jan 20, 2015 23:11:22 GMT
One article in the WSJ said that previous contributions won't be affected, but who knows. I agree that changing terms to existing plans is BS. Seems like such a weird thing to target. Why discourage people from saving? NY State allows contributions to be deducted from state taxes, but if that changes too, there would be zero reason for us to invest in a 529. I suppose we'll have to see the full proposal to see how existing plans will be treated. It essentially makes 529 plans worthless and no one would use them - resulting in no actual money going to the treasury if only applied to new contributions. It essentially just kills a vehicle for middle class families to catch a small break on saving for their kids' college. I find it bizarre that this some how helps the Democratic party in 2016 - which is all this speech is about anyway. I can not figure out how this could help them, I can't see anyone whom this would benefit ( besides the treasury ) I haven't been the biggest 529 supporter over the years but this just seems stupid to little ole me. |
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Post by gmcwife1 on Jan 20, 2015 23:14:59 GMT
That's what we get with all the "FREE" stuff--more taxes! The first thing I thought when I heard about his community college plan, was that there had to be a catch. We can't afford to fully support our road construction, our police forces, etc, so I have yet to understand how we can add paying for college  |
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Post by SabrinaM on Jan 20, 2015 23:37:23 GMT
I thought Pell Grants already allowed lower income people to go to school for cheap/free? My sister and her husband both have degrees through Pell Grants and other state funding.
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pudgygroundhog
Pearl Clutcher
Posts: 4,643
Location: The Grand Canyon
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Post by pudgygroundhog on Jan 20, 2015 23:47:29 GMT
What would be the Point of having a 529 then??? If there aren't tax benefits then just invest the money. And this administration has never once considered the impact a policy has on the middle class why would you expect them to now? New York State allows contributions up to a certain level be deducted from state taxes. |
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Post by threegirls on Jan 20, 2015 23:48:45 GMT
According to the article in Forbes Obama is also targeting Coverdell accounts. I don't think any of these ideas will pass, at least I hope not. Why Obama would even consider making it harder for the middle class to save for college is beyond me.
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Post by freecharlie on Jan 21, 2015 0:39:17 GMT
What would be the Point of having a 529 then??? If there aren't tax benefits then just invest the money. And this administration has never once considered the impact a policy has on the middle class why would you expect them to now? New York State allows contributions up to a certain level be deducted from state taxes. so does colorado. I wish there was a non-bible thumping, fiscal conservative who is more socially accepting that I could vote for for president, but unfortunately as long as the Republican party is more interested in shoving the bible at the public than actually being conservatively responsible the Democrats are the lessor of two evils. The middle class gets screwed by the Democrats and screwed by the republicans. |
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Post by mrgiedrnkr on Jan 21, 2015 1:59:18 GMT
I get the feeling more and more that people who genuinely try to be proactive and fiscally responsible are punished. What was it, 2 years ago that the FSA max got lowered? Those of us who wanted to save for health care and insurance premiums were dinged and it was lowered from $5k to $2,500. With a $6k deductible, the $2,500 barely makes a dent.
Now, they want to remove the incentive to save for college? We have 529s for our boys. We would like to be responsible and allow them the smallest student loans possible. But, now that benefit will be taken away.
Just makes me angry
Stacy
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Post by littlemama on Jan 21, 2015 2:07:15 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes.
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Post by Kymberlee on Jan 21, 2015 2:30:30 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. Well, I'm strictly "middle class" as are all my friends most of which put money into some sort of savings account for their kids for college. I find it a little off putting that you find saving for college a prerogative of the wealthy. |
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Post by eebud on Jan 21, 2015 2:42:17 GMT
I get the feeling more and more that people who genuinely try to be proactive and fiscally responsible are punished. What was it, 2 years ago that the FSA max got lowered? Those of us who wanted to save for health care and insurance premiums were dinged and it was lowered from $5k to $2,500. With a $6k deductible, the $2,500 barely makes a dent. Now, they want to remove the incentive to save for college? We have 529s for our boys. We would like to be responsible and allow them the smallest student loans possible. But, now that benefit will be taken away. Just makes me angry Stacy Before obamacare there was no limit. Your company may have put a limit on it but the government didn't. Part of the way they are paying for obamacare is putting a $2500 max. |
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pudgygroundhog
Pearl Clutcher
Posts: 4,643
Location: The Grand Canyon
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Post by pudgygroundhog on Jan 21, 2015 2:56:16 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. I think the truly wealthy have trust funds.  I know multiple people who save for college (in one way or another) and they aren't making 150k. I think for some people it can be very difficult to find the extra money for college savings after taxes, bills, retirement funds, etc., but it is certainly not out of reach. Some people truly don't have the money and some people choose other priorities. |
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Post by Pahina722 on Jan 21, 2015 3:00:05 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. Well, I'm strictly "middle class" as are all my friends most of which put money into some sort of savings account for their kids for college. I find it a little off putting that you find saving for college a prerogative of the wealthy. I'm also solidly middle class and have been contributing to a 529 since the day we adopted my son. All of our friends are doing so as well or they did some version of Florida Prepaid tuition for their children--and the only ones who make in excess of $150k live in California where the housing costs are astronomical so it doesn't go as far. |
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raindancer
Pearl Clutcher
Posts: 3,095
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Post by raindancer on Jan 21, 2015 3:08:25 GMT
What? Way to throw middle-class college savers under the bus! Maybe this is how the administration is planning to pay for everyone's 2-yr community college tuition? This is my understanding of the proposal. I'm not sure how this is supposed to help the middle class... |
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Post by hop2 on Jan 21, 2015 3:11:37 GMT
Maybe it's regional? Pretty much everyone I know has a college savings account of some kind for their kids, even if it's just 5 a week. Most of the people I know are firemen and nurses and police officers, crane operators, construction workers etc. You know solidly middle class. We're certainly not rich either.
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raindancer
Pearl Clutcher
Posts: 3,095
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Post by raindancer on Jan 21, 2015 3:12:39 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. I think this is an odd statement. I never talk to anyone I know about finances or savings or investments. I'm very private, and I don't have any friends who do either. I have no idea who saves what and how. I suspect you don't really know either. |
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Post by imkat on Jan 21, 2015 3:13:36 GMT
We have three 529s. Seems like an odd thing to target. I like Obama, but happy this will not pass Congress.
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Post by pretzels on Jan 21, 2015 3:21:11 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. I don't know where you live, but...I wouldn't consider that "wealthy." DH and I are doing well, but we haven't always, but we've always had college savings for our children. |
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tincin
Drama Llama
Posts: 5,368
Jul 25, 2014 4:55:32 GMT
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Post by tincin on Jan 21, 2015 3:22:30 GMT
The plan is to pay for the free community college by increasing taxes on the 1%.
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Post by Darcy Collins on Jan 21, 2015 3:29:58 GMT
See, I don't know any middle class people who have extra income to funnel into one of these plans, so to me, this is something for the wealthy, even though it has been touted as a program for the middle class. The only two people I know who put money into one of these make in excess of 150k per year, excluding their spouses' incomes. Give me a break. This is truly one of the most ridiculous things I've heard in a while. You really need to expand your group of friends. There are about 35 million households with children in the US (per the 2010 census. There are 11.6 million 529 plans - now some of those households will have multiple plans for multiple children - but a decent number of people are saving for their children's future. And FYI, the wealthy use FLPs and FLL vehicles as they are much more tax advantageous. |
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Post by scrapApea on Jan 21, 2015 3:34:24 GMT
"Everyone" but the middle class also known as those who work and pay for everyone else
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I know multiple people who save for college (in one way or another) and they aren't making 150k. I think for some people it can be very difficult to find the extra money for college savings after taxes, bills, retirement funds, etc., but it is certainly not out of reach. Some people truly don't have the money and some people choose other priorities.
