Child Savings Fund

[Big dreams]

Last Tuesday night, my brother-in-law died in a car accident. He has a son who turned 9 Friday. During the funeral arrangements, we had to discuss a fund where people could donate to in his honor. I suggested a college fun for his son which everyone agreed with. I have heard of the 529 fund however, I am afraid that if his son doesn't go to college, the money will be lost. Does anyone have suggestions on this? I am torn as in one way I want him to go to college but if he doesn't, I don't want for him to lose out on the money either.

[Sunkist]

I would suggest a simple savings account be set up at your local bank initially so people can easily donate. Then a few months down the road when everyone is thinking more clearly you can decide what to do long term. He wouldn't lose the money if he doesn't go to college but would be taxed. Research the Vanguard Star fund. So sorry for your loss. May God bring comfort and healing to your family.

[TampaJim]

Seek the advice of a professional certified financial planner.
Basic 529 plans can be used for vocational schools, etc.
The beneficiary can be changed as well ... pretty neat trick.
And if simply ‘cashed out’ it’s a 10% penalty plus income taxes.

[Bsktball55]

Personally I just started my daughter's college fund. I am just buying a Vanguard mutual fund and keeping it separated in my Scottrade account. I'm sure it's not the best method, but it offers the most options. If she were to receive a scholarship, we could always use the savings to buy her a car or she could use it to put towards a house at some point.

[artcarney_agr]

Seek the advice of a professional certified financial planner.
Basic 529 plans can be used for vocational schools, etc.
The beneficiary can be changed as well ... pretty neat trick.
And if simply ‘cashed out’ it’s a 10% penalty plus income taxes.

Definitely. A financial planner/wealth management consultant will be able to help guide you to maximize the amount the child will get and what things you can do to avoid paying so much in taxes on it.

[n2ratfishin]

Sorry for your loss! I agree with getting professional financial advice.

[davesz518]

Seek the advice of a professional certified financial planner.
Basic 529 plans can be used for vocational schools, etc.
The beneficiary can be changed as well ... pretty neat trick.
And if simply ‘cashed out’ it’s a 10% penalty plus income taxes.

^^^^This.....no regrets

[wiget10]

529 would always get the money back you put in without taxes or penalty. The growth would be taxes as ordinary income, plus 10% penalty.

[Jeff Hahn]

Definitely. A financial planner/wealth management consultant will be able to help guide you to maximize the amount the child will get and what things you can do to avoid paying so much in taxes on it.

THIS^^^. Sorry for your loss and for his family.

[berudd]

529 would always get the money back you put in without taxes or penalty. The growth would be taxes as ordinary income, plus 10% penalty.

And he could use it for anything in that case. So if he doesn't go to college he would still have a little fund to get him started. Also, 529 contribution are tax deductible. Putting money in a savings account is not.

[Jbass2]

Give yourself and your family 6 months to make a decision. You got too much going on to think clearly about what you want to do with it and where it should go. Collect the money and put it in a 6 month CD, and then when the CD matures you can make a clear decision later down the road for the best interest of the kid.

Sorry for your loss. That is a terrible tragedy.