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Several options available for investing for a child's college

Radio Transcript, 60 seconds, for use during week of March 17.

This is an Invest Wisely minute brought to you by Iowa State University Extension.

There are several options for investing for a child’s or grandchild’s college education.  One is a custodial account, where you invest in the child’s name. Keep in mind that the child assumes control of the account at legal age and may not use the funds as you intended.

Other options, such as a Coverdell Education Savings Account or a state’s 529 (five twenty nine) college savings plan, keep control of the money with the person doing the investing. Also, these accounts can be transferred to another child if the first one doesn’t need all the money.

There are different tax situations with each option, so study them carefully for what works best for your family.

Invest Wisely comes from Iowa State University Extension through a grant from the Investor Protection Trust providing investor education on the web at investorprotection.org.

 

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Updated March 17, 2008