Investing for college (3 children)

CMSS · #1 (**permalink**) 05-03-2008, 07:45 PM

I am helping my mother set up 3 college savings accounts.
One for my niece that will graduate in 4 years, one for my nephew that will graduate in 11 years, and one for my child that is 5 months old. It isn't a huge amount of money but will be added to over the years.

I am going nuts trying to figure out the best options.

Currently, I am considering a Roth IRA for my child, a 529 plan for my nephew, and a money market for my niece.

Does that sound like the best combination? ANY suggestions will be welcomed!

Newbie · #2 (**permalink**) 05-26-2008, 12:52 AM

A person has to have earned income to open a Roth so your 5 month old wouldn't qualify for one. A 529 might be a better option. 529s are transferable among family members incase something happens and the intended beneficiary doesn't use all the funds. Your niece's money market could be in a 529 and she could reap the benefits of tax free interest on the earnings. 529s do discount financial aid, however, that shouldn't necessarily be a reason to pass on the tax free earnings.

ESAs (also called Coverdells or Educational IRAs) are another option but congress is currently allowing some of the provisions of ESAs to sunset in 2011 like the increased contribution limit of $2000/year. That is set to go down to $500.

david007 · #3 (**permalink**) 06-23-2008, 08:24 AM

In my opinion, 529 college savings plan is the best one for you.

Quote:

Originally Posted by CMSS

I am helping my mother set up 3 college savings accounts.
One for my niece that will graduate in 4 years, one for my nephew that will graduate in 11 years, and one for my child that is 5 months old. It isn't a huge amount of money but will be added to over the years.

I am going nuts trying to figure out the best options.

Currently, I am considering a Roth IRA for my child, a 529 plan for my nephew, and a money market for my niece.

Does that sound like the best combination? ANY suggestions will be welcomed!

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