Savings Plan for Kids

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  1. Hi guys! My LO is 9 months now and we have some $ saved up for him. We want to invest it wisely so he is something for college/future. I'm aware of 529 plans but there's too many rules and restrictions. And when I try to research other plans, I just get overwhelmed. I was curious on how everyone else is saving for their kids. TIA!!!
     
  2. We have 529 plans. What rules and restrictions are you concerned about?
     
  3. There's a bunch of different ones. But a lot of them were specifically for tuition but for things like living expenses while in college get taxed heavily.
     
  4. We have a NY 529 plan.

    How about a 529 plan for tuition and then a regular savings account for any future college living expenses.

    These rules are no different than from when your child would have to apply for financial aide. When I tried to see if I could dorm it was plainly stated that college living expenses are not covered only tuition.
     

  5. I'm thinking going the Roth IRA route but don't know much about them besides that they play the markets much like the 529. It's just so confusing!
     

  6. A Roth IRA requires earned income, like from wages. A young child would not be eligible.

    We have 529 plans for our kids.
     

  7. I can still do a Roth IRA in my name though as just a savings plan and not in my child's name. Right?
     
  8. You should look into educational savings accounts. How are you saving for retirement now for yourself?
     
  9. A money market account may be up your alley if you don't want any restrictions on how the money is to be used. You may want to consult a financial planner though. I think a Roth IRA is a way to save for retirement and has restrictions. I could totally be wrong but my recollection is that with a 401K you are not taxed now but are taxed when you take money out upon retirement and a Roth IRA is the opposite...you are taxed now but not later. But I could be totally wrong.
     

  10. How I understood is that with the Roth any money I put in can be withdrawn without penalty if used to educational expenses, just the interest amount earned has to be withdrawn at retirement to avoid penalty. So confusing. And as far as financial advisors I find that most of them pitch what they get the most return on.
     
  11. I assume you expect not to apply for financial aid when your child goes to college. If you do, you should be aware that all money the child has (bank accounts, whatever) are assumed to be available 100% for his/her education. Your assets (savings, etc.) are treated differently.
     

  12. Money market accounts barely earn interest and won't keep up with inflation.

    Roth IRAs have special rules for education withdrawals. Personally, I'm using a 529 for my daughter's college fund and maxing the Roth for my own retirement.
     
  13. It's a nice idea savings money for children.Saving for a child today is a wonderful gift for their future. Not only can they start their adult lives with some savings in hand, but getting kids involved early with saving also helps them learn important lessons about money.