College Savings For Grandchildren
September 3rd, 2007
Question: best way for college savings for grandchild?
whats one one the better college savings funds? working on savings for my grandchild. thanks
Answer: Don’t open an UGMA or UTMA acccount for the child. that money belongs to the child when they are 18 or 21, and they can spend it on anything they want to. Period.
Open a Sec. 529 Plan. You can be the owner and control it. The money grows taxdeferred and can be taken out without paying income tax if spent on college. Nearly every state has its own plan, but you don’t have to live in the that state to purchase its plan. Buy the plan with the best investment choices. Many plans have “target” investment choices, so if the child is 2, the money will be invested entirely in growth funds, and as they get older, the money will gradually be moved to bonds and cash to be sure it will be there when you need it.
The nonprofit web site that explains all about Sec. 529 plans and evaluates every state’s plans is:
www.savingforcollege.com
They have lists of “best” plans, least expensive (lowest fees), plans you can invest in directly (you don’t need an investment advisor), etc. Also calculators to see how much the child will need for college.
Final word of advice: only contribute money you can afford to give up, that you won’t need for your own retirement.
Put Down the Piggy Bank and Back Away Slowly
Related posts
Posted in College Savings Plans | 
Tags: 529, college, college savings for grandchildren, education, finance, taxes