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Saving money for the grandkids?
Old 10-22-2013, 07:20 PM   #1
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Saving money for the grandkids?

I would like to set up a savings account for our 2 year old granddaughter. What is the best way to do it? Not sure if a 529 is the best way.

My grandparents did this for us kids many years ago and it was a nice little surprise when they gave it to us.

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Old 10-22-2013, 07:23 PM   #2
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No suggestions on your question, people better at that will post shortly. But it's way cool that you want to do that.

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Old 10-22-2013, 08:02 PM   #3
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Depends on how much. If it is a few thousand to gift to them at college age, then a simple custodial account will suffice. It is theirs at either 18 or 21 legally, depending on your state.

I have these for our niece and nephews, as they won't amount to a whole lot and will just be a nice surprise when given.

More than that and you'll need to look at other methods.
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Old 10-23-2013, 07:28 AM   #4
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We are doing 529s for our nine grandkids.
"The best thing about the future is that it happens one day at a time." -- A. Lincoln
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Old 10-23-2013, 11:31 AM   #5
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If you are going to contribute any significant amount and invest it in something that will grow, the 529 has the advantage of not triggering any tax issues for the grandchild.

We had custodial accounts for our kids (which the grandparents also contributed to) and they triggered significant "kiddie tax" payments over the years (which of course we paid for them rather than taking it out of the accounts). Given that nearly all occupations in the 21st century require some post-high-school education, the likelihood that this would not be useful to your grandchild is quite small.

Interestingly, although not necessarily relevant, I heard recently through our local United Way that if a child has even a very small ($25) college fund set up at birth, they are twice as likely to attend college than those without such a fund. It sets an expectation that changes the way they look at their future.
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