Investing for Grandchildren’s College / Other Expenses via Roth IRA
As an alternative to a 529 plan, my financial advisor recommends rolling over some of my 401K or present Roth funds into a separate Roth where my very young grandchildren are beneficiaries. It would have tax free growth without the use restrictions of a 529 plan, and would have flexibility in case the college funding landscape changes in the next 15+ years. As an Illinois resident with retirement income not subject to state income tax, the tax benefits from a 529 plan are of marginal use to me. What do you think of that approach?
Terry Says
And your “financial advisor” would help with investing decisions about those Roth IRAs — now and after you’re gone? (And make some nice commissions??!!)
And if you die, and the grandchildren inherit those IRAs, did he mention it would severely impact their eligibility for additional financial aid??
And if you die, and the grandchildren inherit as minors, did he mention the court would likely name a conservator for the money (since you didn’t leave it to your adult children)?
And if you die, and your grandchildren are over age 18, did he mention they can do whatever they want with the money — maybe a fast car instead of college tuition??
Did your “financial advisor” bring up all those issues? If not, get a new financial advisor!!
And open a 529 in Illinois Bright Start plan.
