Best savings accounts for kids
Hi Terry, looking to start some sort of savings account for my 11 year old son and 1 year old granddaughter. What are best options for their future nest egg?
Terry Says
You want to open a 529 College Savings account where the money will grow tax-free for college. And you should open it with yourselves as custodian, so it will not count as a family asset when they first apply for financial aid.
If you’re not familiar with these plans, the money can be invested in any state’s plan and will grow tax free to pay for approved college expenses at ANY school, in any state. It’s the perfect gift to start — and add to — on every birthday or holiday.
In addition, many states (including Illinois)offer a tax deduction on your state tax return for your contributions. As for choosing the investments inside the plan, you’ll probably want to stick with the age-based plan, and let them invest appropriately– growin gmore conservative as college approaches.
To learn more go to www.SavingforCollege.com. There you can see how the plans are rated for past performance, and even get a direct link to each state’s plan to get the application form.
