Multiple child savings plan

I have two children very close in age (about a year apart), I would like to set up a flexible way to save for their educations. Since they will be going to college at roughly the same time is it possible to have a 529B account with multiple beneficiaries? If not what would be the best investment strategy for them? I probably should say that I already have a 529 account open for one child. I am wiling to do just about anything that will achieve my stated goal such as stopping all future contributions to the current plan and focusing them on another. Thanks

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A 529 plan can only have a single beneficiary, so you'll need to open up another 529 account for your other child, and divide your contributions between the two of them. Down the line you have the flexibility to transfer money from one child's account to another, but you're not allowed use one child's account to pay the other child's education expenses, directly.

As for other alternatives, the current version of the kiddie tax strongly favors tax-advantaged 529 plans, unless you plan to save a relatively small amount of money. A similar alternative to a 529, which also has tax benefits, is a Coverdell Education Savings Account. It works a lot like a Roth IRA (it used to be called an Education IRA). Its main problem is an annual $2,000 limit on contributions, much lower than the 529 contribution limits.

Savingforcollege.com has detailed information about both 529 plans and Coverdell ESAs.

-Tad