What is the best college fund?

Question

My husband is military, so I do not want something state specific. I would like to set up a found for my one-year-old. I want a fund to where he isn't locked into one state.

Any ideas?

Answer 1

I am going to go with the good ol 529 College Savings Plan.  It is not state specific, although there can be additional benefits for keeping in state.  It also carries the option of purchasing "tuition credits" at their current price, and using them in the future, as cost of education continually increases.  here is a breif paragraph of the 529.  I hope this helps:

Money from a 529 plan can be used for tuition, fees, books, supplies and equipment required for study at any accredited college, university or vocational school in the United States and at some foreign universities.

The money can also be used for room and board, as long as the fund beneficiary is at least a half-time student. Off-campus housing costs are covered up to the allowance for room and board that the college includes in its cost of attendance for federal financial-aid purposes.

Qualified education expenses do not include student loans and student loan interest.

A distribution from a 529 plan that is not used for the above qualified educational expenses is subject to income tax and an additional 10% early-distribution penalty unless one of the following conditions is satisfied:

    * The designated beneficiary dies, and the distribution goes to another beneficiary or to the estate of the designated beneficiary.

    * The designated beneficiary becomes disabled. A person is considered disabled if there is proof that he or she cannot do any substantial gainful activity because of a physical or mental condition. A physician must determine that the individual's condition can be expected to result in death or continue indefinitely.

    * The designated beneficiary receives any of the following:

          o a qualified scholarship excludable from gross income

          o veterans' educational assistance

          o employer-provided educational assistance

          o any other nontaxable payments (other than gifts, bequests or inheritances) received for education expenses

    * The distribution is included in income only because the qualified education expenses were taken into account in determining the 'Hope Credit' or 'Lifetime Learning Credit', both of which are tax credits that reduce the amount of the taxable income of an individual funding a student's education.

    * The distribution is made before 2007 and used for qualified higher-education expenses but included in income because it was paid from a 529 plan established and maintained by an eligible educational institution