Originally Posted by youbet
OH..... maybe I misunderstood. It sounded like you were recommending 529b's over Coverdells in an "all or nothing" recommendation. But now I understand you're agreeing with me that each has its pros and cons and the investor needs to investigate both to determine the percentage of resources to invest in each.
I understand your point of view.
Actually, I would like to throw another idea in, but some may find it too much work.
Set up the following;
1)Custodial account: A great place for cash gifts from relatives, cash for doing chores, etc. Parents can kick in some money for good behavior or good grades or whatever. It can become a help in college as kids always need money for this and that.
2)Educational IRAs: Particularly if the parents attended a private school or academy, and want their kids to have the same experience. Also can help with computers, tuition, books, etc for academies like Julliard, etc.
3)529 Plans: These are big with grandparents, as you can gift a lot of money to them and they are an estate planning tool, as the money goes out of the grandparent's estate. Also, it does not figure into the financial AID calculation in a negative as much as a custodial account would.......
In our case, DW and I were funding 529 accounts for the kids. We had pretty healthy balances because we put a lot in early on. When my late sister died, she left her 403B to the kids. As a beneficiary IRA, the annual RMD's are automatically sold out and the money electronically transferred to their custodial accounts. So, in effect, they will have a 529, a custodial account (not a large amount of money), and their aunt's IRA which she requested go to secondary schooling........