Can you contribute to a 529 before children are born?

Answer 1

If you are expecting a child or planning to start a family in the future, you can easily setup a 529 college savings plan and start putting money aside now. Here's how: 1. Select the best 529 for you right now, SavingForCollege.com has a good set of tools for choosing a plan, and you can also talk to your financial advisor. 2. Open the 529 plan and name you or your spouse as the beneficiary. (Note: Some 529 plans restrict beneficiaries to persons under age 21, in which case you might choose a sibling or cousin of your unborn child, note that the beneficiary must be a blood relative in order to transfer it to your child.) 3. After your little one arrives, you can transfer the assets tax-free. Your 529 plan can provide you with the necessary form to make the change. Getting started as early as possible can make a significant difference in the amount of debt you need to cover college costs. If you can save $50 per month, an extra 5 years to save translates into more than $10,000 in additional savings, based on a 7% annual return. One final note, some plans have a time limit on spending the account proceeds, such as within 10 years of when the original beneficiary would be expected to enter college. Be sure to do your homework or consult a financial advisor to figure out what's going to work best for your family.