Best College Savings Account For Baby

The coverdell educational savings account is a tax advantaged way to contribute up to 2 000 a year to a child s account.

Best college savings account for baby.

But when it comes to establishing a college fund for your newborn time is actually on your side for once. 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. After all according to data reported to u s. 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.

This account isn t available to everyone because you need to be under a certain income level to contribute. Saving the same amount in the average savings account will only grow to which is less than using a 529 plan. If you can save more than 2 000 per year a section 529 savings plan might be your best choice. 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. The only caps placed on contributions to section 529 savings plans are lifetime totals for each child. I set up two of them for my daughters one of whom is in college. Parents can contribute to lifetime maximums that range from the low 100 000s to over 300 000.

This amount must be invested after taxes are taken out but it grows tax free. Over the years i ve become a big fan of 529 college savings plans. The advantage is that funds grow free of federal taxes. While it s natural to want to put your baby first don t forget to take care of your own financial future.

Building a college fund can be a major financial challenge. Coverdell education savings accounts. Save for baby s college. They are great savings vehicles with lots of flexibility and.

529 college savings plans if you think higher education is in your child s future consider a 529 savings plan.