529 plan with $25 per month contribution?

Either just open the one account, changing beneficiaries is not a problem.

Which State are you using.

Have you looked into US Savings Bonds? You can buy a $50 Series I bond every month, alternating between the kids. Actually, if you purchase them in *your* name (you can list the kid as benificiary, but not co-owner) the bonds can be used to fund college expenses tax-free -- unless they change the tax laws again. In any rate, the interest grows tax deferred and is exempt from state income taxes.

If you purchase them in the kids' names, they will eventually be taxed at their tax rate, but will count towards their assets when colleges determine finacial aid.

If you purchase them in your name with Kid as co-owner, I don't know how that work for financial aid calculations.

The bonds I purchased for my daughter's education have beat the pants off the Fidelity Blue Chip Growth fund that I started as a college fund

I occasionally look at 529 plans, and they never really look that appealing to me. I think they are overhyped.

Best regards, Bob

It is funny that you offer this up without listing the other more efficient ways.

My mom would call this a fish.

So, "go fish", what other more efficient ways are there?

-Matt

BMS wrote:

I have a 403B plan at work and I thought it made more sense to max out my 403B contributions rather than start a 529 plan with the extra money I had. Reason is I can put in $14,000 this year( I believe the limit goes up every year for a few years), plus my company matches 33 cents for every dollar.

Uh, you're losing me here. Isn't a 403(b) for *your* retirement?

I'm talking about saving for my kids' eduction. They'll be 34 and 35 years old when I am 65 and possibly ready to retire!

mark

Many folks consider it far more important to max out savings your own retirement *first* and then worry about savings for kids educations.

Why? You'd be skipping a generation, in terms of being able to pass down wealth at a time when it matters most. In other words, if I were to wait until I retired to bestow my maxed-out retirement savings on my kids, they'd be much too old for college anyway. I guess I could skip them and just give it to my presumed grandchildren, but that's kinda unfair, ain't it?

Not being condescending...I'm just trying to understand the rationale of this.

mark

The OP, IIRC, claimed to barely be able to put $50/mo into education savings. If he's that close to the edge of savings, his priority needs to be saving for his retirement, not his kid's educations. If he can only afford one of the two - retirement or education, there's no question which needs to come first.

One may borrow money for college. Kids can pay for it themself, put it off or even skip it. One doesn't have all of those options for retirement.

If you've got enough cash to maximize all your retirment accounts (IRA, 401k, etc), *then* it's time to worry about your kids education. If you're wringing your hands over $25-$50/mo at the margin, you're very likely not in a position to be putting your retirement second.

An article I read today suggested that a Roth was a better place to park college money than a 529 since you can take distributions from a Roth for educational expenses without taxes or penalties. And, if your little terror doesn't go to school, you get to keep it for retirement. Is this a good plan or not?

-Will

Will Trice wrote: > An article I read today suggested that a Roth was a better place to park

To me that wastes your Roth, which is one of the very few methods of making your investment earnings truly tax-free. If Roth contribution limits were a lot higher it would be different but you just can't get enough money into them as it is, let alone tap into that to cover college costs.

-Tad