Ask Terry Questions College plan or saving plan for grandkids

College plan or saving plan for grandkids

By Terry Savage on October 16, 2015 | College Savings / Student Loans

What is the best plan for young grandkids?? Thant grandparents could afford…Thanks, Joan

Terry Says:  Here’s what I would do.  Go to and search for their 529 college savings plan.  You can open an account with a small amount of money, and keep adding to it.  When they ask what funds you want to use, choose the “age-based” investment option –and let them make the choices.  You don’t have to open a separate account for each grandchild, as money can be transferred or used between children in the same family.  So just use the oldest grandchild for each of your adult children to open an account.  The money grows tax-free, and can be used for any college in any state.  You don’t get a deduction for your contribution, but you can get the money back if you need it by paying a 10% penalty and taxes on any gains.  (Some states do give a small deduction on state taxes for investments in their state plan — but the low costs in the Vanguard plan tend to offset that benefit over time.)

That’s exactly what I did for my young nephew!



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