Editor’s note: Nancy is on the verge of becoming a grandmother for the first time, and has many questions about what has changed since she was in the Mom’s seat. Carol, a mom with young kids, tries to help her navigate modern babydom.
Gran Nan: Should I start a 529 account for my grandson? Can he have lots of 529 accounts? Should I see if someone else is starting one for him—or should I just plunge in and start one even if I won’t be making an impressive contribution?
Carol: YES, YES, and IT MATTERS NOT! Can a child ever have too much money for education?
Let me tell you a little story. When our first child was born seven years ago, our financial planner told us it would cost more than $225,000 for four years of college—public, mind you—by the time he reached 18. Gulp. (Over $600,000 for a private college. Huge Gulp). NO contribution is too small. Start that puppy.
Also, your 529 won’t preclude the parents opening up one of their own. (We did. Later.) More money can only help. A helpful hint—My father-in-law made sure we received copies of the statement from his 529 so we know how much our kids have in their accounts, which is extremely helpful as we plan. It’s also a regular reminder of the amazing gift he gave us—and continues to give us as the lump sum earns interest.
Read about the different kinds of 529s—they vary from state to state—and their tax benefits.