Our first grandchild in due in November. What is the best way to save for college?

Question

does the baby need a social security number to open an account. Whose name should the account be in? thanks

Answer 1

Mesb gave you some good advice about the 529 college savings plan. Allow me to expand upon her answer. The 529 plan is a state sponsered college savings plan. Almost all states have their own version of the plan but you are allowed to use any states plan regardless to what state you live in. Each state plan has a series of investments within it that range from very conservative (for the child who will be needing the funds within 5 years) to aggressive (for the child who will have more than 10 years until they need it). The account looks very much like a 401k plan in terms of how it is set up. They usually have at least 10 different investments that you can chose between. The grand parent or parent can open the account for the child. In this case the grand parent would be the owner of the account and have complete control. The money grows tax deferred so anything that it earns will not affect your taxes. If you use the money for qualified educational expenses it will be tax free when you withdraw it. The child can use the money for any school. It doesn't have to be in the state that you set the plan up with. If for any reason the child doesn't go to college you can either dedicate the money to another child, for you if you want to take some classes, or just pull the money out and use it for your own retirement. In that case the withdrawl would be taxable. You should first look at the plan for the state in which you live to see if they offer any tax advantages for state residents. You would then compare that plan to other plans to compare fees, minimum deposit requirements, investment selections etc. There is a great website that allows you to compare all the different state plans easily. www.savingforcollege.com Keep in mind that each state plan is run differently. Also be aware that some states also offer a prepaid college plan which allows you to pay for your child's or grand child's future college expenses in today's dollars. They usually have payment plans set up so that the earlier that you start the cheaper per month it is. I am currently using a pre-paid college plan from the state of Florida and a 529 plan from the state of Ohio. I found those plans to be best for me. Good luck.

Answer 2

contact a mutual funds company about a 529 account. We go through Prudential. a 529 account can be opened by either a parent or grandparent. The person who opens the account is considered the 'owner'. The money can go to tuition, supplies, and room and board.

Answer 3

savings bonds and cds they dont go bad and they cat touch them until they are 18 to 21 and they collect intrest the whole time
as for an account yes they do have to have a ss number here in iowa and they have to be a certain age here it is 13 to have one without an adult (over 21) but that is in iowa. talk to your bank and find out. they should have the answers.

Answer 4

college funds are different in each state. Best saving is hi yield govt bonds that garantee interest over inflation.. like inflatiton +3%. or more, it doesn't seem like much but considering the govt's behavior garantees 5%, it is a fair amt over 18 years

Answer 5

Start getting the kid brochures on joining the Army and earning their own education. Something earned is always more appreciated than something given.