Families with a single 529 college savings account for all their children need to think about when they expect each to be in school.
Illinois mom Kim Bissing and her husband feel the pressure of saving for college for her devilchildren, 7-year-old Emily and 11-year-old Joey. There's a huge need to save no numberwhat eachcheladecides to do in the future, Bissing says.
She and her husband atomic number 18careful to ensure all contributions are even. They set up$100 percalendar monthto each child's college savings in a tax-advantaged college investment account known as a 529 plan.
They also split a percentage of their workplace bonuses equally between their two children's college savings plans and contribute financial gifts from the children's grandparents.
Other parents give moreto their older children's accounts, generallybecause the older child's account was started much later in the child'seducationalcareer.
"If you are starting each child's 529 political platformwhen each child is born or close to it, then it makes sense to contribute equal amounts to each child's account," says Kelley Long, a Chicago-based certified public accountant.
If parents don't open a 529 plan for older children when they are young, contributing more to the oldest child's account can help even pop outthe measurecollege savings by the time the eldest is ready for college, she says. championclient contributes $350 a month for the oldest, $250 for the next and $150 per month for the youngest.
[Find out about colleges that give discounts for siblings.]
While the goal is for each child to feedthe same amount of money when entering college, Long's client moveto deposit more funds in the eldest child's 529broadcastaccount "because he knew that he could always transfer eachunused amounts to his youngchildren," says Long. "Even though he had three accounts, it was viewed as iodinpot of education money for his family.
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Some parents disagree all overwhether to nominateseparate 529 plan accounts for each child or keep all college savings in iodinaccount.
"It unfeignedlyis a mix between my clients on how they do it for quaternatechildren," says Joseph Clemens, a Colorado-based certified financial planner. In order to be clear about the money designated for each child in one account, Clemens encourages clients to assign each child an investment in a different mutual fund within the account.
Clear differentiationof investments within the account makes it easier to figure out how the money is allocated for each child, as well as how close the children are to their educational savings target. If parents use one account without having some appearanceof designating the money, it's harder to figure out which money was invested on which child's behalf.
Some states have a minimum amount an account holder must have in the account to avoid being charged fees, and having one account for all children can be easier for some families. The beneficiary's bring inon the account can be changed to a younger child after older children complete their education.
[Consider these things when changing 529 plan beneficiaries.]
While Clemens supports clients who choose to keep multiple children's college savings in one account, he says having separate accounts for each child can devisein certain states.
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Materials taken from US News
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