What to do with Sean's $$$??

My lucky boy has been blessed with very generous gifts of cash in his 6 months. He's got more money than mommy and daddy at this point! It's sitting in his savings account earning .75% interest right now and it's driving me mad!!

We're thinking of possibly buying some savings bonds and/or starting a college savings plan (i.e. 529)... I just don't know where to start with the 529!

Any advice?? I want to make sure I'm responsible with his money and earning 3/4% ain't cutting it!

TIA!

Kathi - DEFINITELY open the 529 account! We have one for Paul, too and it was super easy to set up.

My advice is just call your bank, or visit their website and see if they offer a 529. You could probably set it up over the phone or even online!

HTH!

Thanks, Claud! You opened your 529 in NY? I know Virginia's plan is more flexible than most states. And what about this 2010 tax penalty? (Congress *should* renew it, but if they don't... )

I really should start to read up on this stuff!!

I wasn't aware that you couldn't open a 529 account in NY? Now I am confused.

Our bank in HQ in Texas - does that make a difference?

Oh no... you can open it in any state that has it!!! Some states have more favorable plans than others. I just don't want to do it in NY and realize later that I should have done it elsewhere!

Kathi, just so you're not confused.....check with your bank on this before you do anything....but as I understand it, it's not about which state has a more 'favorable' plan - its more important not to limit Sean's choices of where to attend college in the future.

Not all 529 accounts are state-sponsored or state-specific. Obviously, we don't know where Paul may want to attend college, so we did not want to limit his choices to just SUNY schools (not that there's ANYTHING wrong with that! ) by opening a NY specific 529 account. The one we opened for him can be used toward any college, in any state. But, that is what our bank offers.

I would check w/your bank to see if they offer a flexible 529 account before you make any decisions.

Thanks again, Claud. I'm perusing this VERY informative website now... http://www.savingforcollege.com/529_plans/529_faq/index.php

We have an appt. w/ our accountant in 2 weeks, so I'll get his advice, too.

I hate procrastinating!! We still haven't done our will yet, either!!

Claud does the 529 have anything to do with the stock market (is it FDIC insured)?

I have Emmas $$ in an ING account. Its earning 3%

I am just starting to research 529 plans also.

Can you believe that on my 1st visit to Motherhood Maternity they offered me some kind of credit card/529 plan! Did they really think I would just open it up with them while standing at the cash register, without any previous research just to save 10% on my pants?

I thought that was a little crazy... but I def have to research the 529's more...

Definitely do something!!

My parents just gave me bonds that I had gotten as a baby and they are worth $2400!! I almost flipped because I never knew I had them.

I am also so thankful because my parents opened a stock account for me when I was younger. It has since grown and now I have money for a downpayment. I am definitely going to do that for my kids.

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Posted by kptoys

Claud does the 529 have anything to do with the stock market (is it FDIC insured)?

I have Emmas $$ in an ING account. Its earning 3%

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Karen - I believe Paul's account is set up to be invested (ie, mutual funds)....however, it is designed to be most aggressive in these years when he's little, and gradually become more conservative as he gets older and closer to going to college.

Basically it's the same mentality that you would apply to a IRA for you and DH.

ETA: The other thing to keep in mind is that the 529 account is saving money to pay for the costs of college as they stand NOW, not 18 years from now ---> which will probably be a BIG difference!

hope this can help you guys out:

http://www.oprah.com/tows/pastshows/200401/tows_past_20040113_f.jhtml

Thank you everyone! Great link, Erica!! Thanks!!

Just so everyone knows - NY's 529 savings plan does NOT limit the child to attend a school only in NY. The major benefit for NY state residents to purchase a NY state 529 plan is the tax benefits they provide.

They are:

-->Federal income taxes are not applied to investment earnings when money is withdrawn to pay qualified expenses.
--> New York State allows tax filers, regardless of their state of residence, a deduction of up to $5,000 per year for plan contributions for individual tax filers, and $10,000 for married couples filing jointly.
--> New York does not tax investment earnings as long as the money is used for qualified expenses.

For instance, a NJ person who opens up a NY state college savings plan would not reap the same tax advantage as a NY resident. You should definitely check with your accountant tho'.

Upromise just took over as Program manager for the NY 529 plan. That makes it easier for the Upromise contributions to be rolled over into the 529 plan.

Can you tell that I just had a presenter come in and speak to our employees about the new plan?

Forgot to add the link:

NY 529