Roth IRA vs. 529

SteveMA
Sun, 30 Sep 2012 10:44:08 +0000

The advantage comes when you withdraw the money. The way the Roth money shows up on your taxes can impact your financial aid picture for the next year. 529 money is always counted as available dollars for college but at a lower rate. If you are a full pay family and won’t ever qualify for financial aid, there isn’t much difference as long as you have had the Roth long enough and you have deposited enough money into the account to pay for college. If you tap into the growth in the account, there is a penalty for taking those funds from the ROTH before age 65. It’s really a hard question to answer fully without seeing your full financial picture but generally the 529 plan is better if you are using the dollars for education.