College funds for grandchildren
Hi! I have a substantial amount of funds in an annuity account. I’d like to begin to draw some of the money out of the annuity to provide future college funds for my grandchildren. They are 11, 9 and 7. I am 68 and married. What’s the best way to allot funds. Thank you
Terry Says
Well, the money in the annuity account is growing tax-deferred. So there doesn’t seem much point in taking it out now — well before your grandchildren need it for college. And you should check with the annuity provider to make sure there wouldn’t be any penalties.
If you want to set up a 520 College Savings account that could be used by all of the grandchildren, go to www.SavingforCollege.com to research your own state’s plan (there might be a tax credit for some contributions), and start making regular contributions now, with new money contributed.
This should be done as part of an overall financial plan, making sure that your current investments are appropriate and not overly costly. Consider a review by a fee-only financial planner — www.NAPFA.org.
