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We have decided to start saving for both boys, and will go with a 529. I'm not sure of the pros for Gerber, but I do know that I really like that anyone can contribute to the 529. (This makes it easy for my parents/grandparents instead of sending savings bonds, or having their own separate accounts)
That's just one perk that caught my eye.
bjlucas1:I definitely want to start something but am not sure which type (maybe a 529?). Does anyone know pros and cons of different programs.
Sorry, this won't be a clicky, but this is a great article that explains 529 plans, and the differences between the investment account versus the pre-paid tuition account, as well as what is and is not exempt from taxes with both plans. I think it answers a lot of questions about 529 plans, honestly.
Cole Henry Quinn
We planned to start with DD and opened an account for her, but honestly the only sizable sums for her future are from her grandpop (my dad) who has given her college savings funds for the last two Christmases. (Same for her cousins). So we do plan to put more away for her while she's young and it can grow, but right now we need to use most of our funds on getting by as it is.
Definite no to Gerber. Whole life insurance is not a great investment. Actually it's not even an okay investment. Some older folks cling to whole life, but with the accessibility of the stock market / mutual funds / CDs nowadays, there is just no reason not to invest instead whenever you can do so safely.
We are putting a certain amount in with each paycheck, and rolling it over into CDs as it hits minimums. Then we'll combine them as they grow, and when we have enough to play with it a little, we'll make decisions then about the best investment at the moment.
529... At your own risk, I'd say. Great for some and not great for others. I know you can get the money out if baby ends up unable or unwilling to attend college, but look into the tax consequences of doing so before you go that route. What if baby decides to go to an unaccredited trade school, or has a terrible health problem and can't attend college due to mental or physical challenges? You might wish that money were more accessible than it's likely to be with a 529.
Grandparents and other family members can give tax-free gifts without 529s as well. The laws changed this year, but it used to be up to 12K a year, for any reason. (If you expect to receive more than that and want to reduce your tax burden, hire a tax lawyer who knows more than I do!)
Yes, we want to fully fund a 529 very quickly so it can grow tax free. You can choose your state (if there is an incentive like a reduction in your state tax) or use any state out there if there is no benefit. You can go through a financial advisor or buy/manage it on your own. I like OH state fund as it has low cost fidelity mutual funds. There are online calculators where you can estimate how much they will need for college and how much you need to contribute. The faster you fund it the better as you will have more time for the money to grow. You can transfer the money into another child/relative's name if your child cannot or does not go to school for any reason. If not, you would pay taxes on the growth when you withdraw if it is not used for tuition/room and board, ect. I would stay away from Gerber and pre-paid tuition. I would also not start a 529 unless you are debt free (except your house) and you are fully funding your retirement accounts (401K & Roth IRA).