Best College Savings Account For Baby

Building a college fund can be a major financial challenge.

Best college savings account for baby.

While it s natural to want to put your baby first don t forget to take care of your own financial future. Saving the same amount in the average savings account will only grow to which is less than using a 529 plan. They are great savings vehicles with lots of flexibility and. The coverdell educational savings account is a tax advantaged way to contribute up to 2 000 a year to a child s account.

Parents can contribute to lifetime maximums that range from the low 100 000s to over 300 000. 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. But when it comes to establishing a college fund for your newborn time is actually on your side for once. Over the years i ve become a big fan of 529 college savings plans.

After all according to data reported to u s. This account isn t available to everyone because you need to be under a certain income level to contribute. This amount must be invested after taxes are taken out but it grows tax free. I set up two of them for my daughters one of whom is in college.

You make contributions and invest the money with this plan and funds can be used at any accredited school in the u s. 529 college savings plans if you think higher education is in your child s future consider a 529 savings plan. An esa allows you to invest up to 2 000 per year. The advantage is that funds grow free of federal taxes.

Save for baby s college. 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. Be sure to use tax favored plans starting with an education savings account esa. News in an annual survey last year the average tuition for the 2019 2020 school year ranged from 41 426 for private colleges to 11 260 for state.

If you can save more than 2 000 per year a section 529 savings plan might be your best choice.