College Planning

Let me answer Kevin?s email tonight. He writes, ?I have several grandchildren of different ages and I want to start a college savings account for each of them. Is 529 College Savings Plan the best place to put this money and how much should each grandchild get? 529 Plan is a wonderful college savings account because you can pull the money out tax-free when you use it for education. If you use it for non-educational expense, you will have to pay a penalty. So if little Johnny turns out not to be the ?college material? you can use this money to pay for someone else?s education to avoid this penalty. 529 Plan offers a favorable gift tax treatment, which can make it an attractive estate planning tool for grandparents. You can also open up a custodial account for each grandchild but be careful! These types of accounts will have to be handed over to your grandkids on their 21st birthday and you will have no say-so over how they can use this money. To make your gifts more equitable you may consider giving your older grandkids a little more money than to their younger siblings because they will have less time for this money to work.