Best College Savings Account For Baby

If you re a grandparent godparent aunt or uncle considering a baby gift for a new parent then a college savings fund such as a 529 saving plan can be a practical gift for new parents.

Best college savings account for baby.

Save for baby s college. If you can save more than 2 000 per year a section 529 savings plan might be your best choice. Parents can contribute to lifetime maximums that range from the low 100 000s to over 300 000. The coverdell educational savings account is a tax advantaged way to contribute up to 2 000 a year to a child s account.

If you start saving for your 1 year old child s college today in a 529 plan you will have about in savings by the time your child is ready for college. Over the years i ve become a big fan of 529 college savings plans. Whether you put the money in a high yield savings a brokerage or 529 account depends on when you might need the money and how it will best benefit your child. I set up two of them for my daughters one of whom is in college.

The advantage is that funds grow free of federal taxes. An esa allows you to invest up to 2 000 per year. Be sure to use tax favored plans starting with an education savings account esa. They are great savings vehicles with lots of flexibility and.

Coverdell education savings accounts. While it s natural to want to put your baby first don t forget to take care of your own financial future. This amount must be invested after taxes are taken out but it grows tax free. But when it comes to establishing a college fund for your newborn time is actually on your side for once.

Saving the same amount in the average savings account will only grow to which is less than using a 529 plan. This account isn t available to everyone because you need to be under a certain income level to contribute. After all according to data reported to u s. You make contributions and invest the money with this plan and funds can be used at any accredited school in the u s.

Building a college fund can be a major financial challenge.