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Jan 9, 2019
Acorn All-American
OK - not trying to start an argument here, but hoping people
will really think about it and avoid the mistake that I made. (sorry - I was at work and posted the one time but didn't have time to answer).

The beauty of a tithing fund is that it gives you almost all of the advantages of a 529 - tax free earnings. There is also the state income tax deduction, but I will come back to that.

The negatives about a 529 include:

1. Limits on what you can invest in
2. Restrictions on what you use the funds for
3. Potential loss of education tax credits and financial assistance. These could be HUGE losses.

Fully understanding those three things will take some effort and some thinking.

Instead, if you invest in tax efficient equities, you have the following:

1. Complete freedom on what you invest in
2. Ability to harvest gains tax free (via donation in kind for tithing, offerings, mission)
3. No restrictions on how you use the money
4. No timing restrictions (you can harvest gains any time you want versus timing with college timeframe)

Using a very simple example - before your kid goes to school, you donate in kind your investment you have made (or harvest capital losses for cash). The cash you would have otherwise used for tithing, you use for tuition. However, it is likely that over the years, you have harvested tithing DIK's and you have some investments where there aren't a lot of gains to tax too. These too you could sell with minimal tax impact, should you need additional funds.

If you find that you want to do the 529 for the state tax benefit. Just before you need the money, you then invest (fully understanding all of the implications (versus what I did well in advance and didn't understand how negative the impact would be for me due to a 529) just before your kid needs the money. You take the tax break that year. Just one more way of having your cake and eating it too.

If you are a non-tithe payer, there are still potential negatives to a 529, but the tax advantaged status is a lot more significant.

It is a an issue that need to be fully understood and vetted. If you think I am wrong, buyer beware. My use of 529 cost me HUGE money.



"We will fight, day or night. Rain or snow. There is no mention of fair weather." By a CB Poster but I can't remember who...

The Mighty Acorns was my high school mascot?!

Let's get to a 16 team football playoff. Bigger than March Madness.

Originally posted on Jan 9, 2019 at 8:12:28pm
Message modified by Acorn on Jan 9, 2019 at 8:13:10pm
Message modified by Acorn on Jan 10, 2019 at 7:11:39am
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