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Message
Non-higher Education fund for infant
Posted on 2/2/15 at 9:56 am
Posted on 2/2/15 at 9:56 am
My grandmother has graciously offered to gift $4K/year to my unborn child for education/tuition. She is going to pay $400 monthly for ten months out of the year once the child is born. she is awesome! This money will be used towards private school tuition since I live in BR.
What is the best investment vehicle to park this money for the four years leading up to pre-school and throughout? We will not have day care expenses as my wife is staying home with the kid.
What is the best investment vehicle to park this money for the four years leading up to pre-school and throughout? We will not have day care expenses as my wife is staying home with the kid.
3
Posted on 2/2/15 at 10:35 am to Motorboat
Does your grandmother want another grandson? I'm taking applications.
Posted on 2/2/15 at 11:01 am to Motorboat
I set up a 529 for college and a UGMA account specifically for other stuff like tuition. The UGMA is a taxable trust type acct just for the benefit of the child. I can pay tuition or whatever else out of that for the child only.
I set it all up and am hoping one of these grandparents will do something nice like that.
I set it all up and am hoping one of these grandparents will do something nice like that.
Posted on 2/2/15 at 11:14 am to Motorboat
Look into a Coverdell ESA. You can park 2K a year there if you are eligible. That can come from you, the grandparent, etc. There are certain restrictions as to income requirements.
Beyond that, it depends upon how risky you want to get with the money. You could set up a minor account, so at least you are not taxed on the money (the kid would be, but under the kiddie tax system).
Right now, tuition for my child in PreK-3 program at a Catholic school is $5200 ($1,000 more than tuition for all other grades because it's such a small size class). Next year, we have been told tuition is going up $200. So starting for Prek-4, tuition will be $4,400 per year. We probably will spend another $1,000 on various fees, uniforms, clothing, field trips, meals, etc.
So when the kid starts a PreK-4 program, you will have $16K in the bank (assuming no growth). The 4K coming in each year should cover most of the tuition expense for elementary school (although it will cover less each year due to inflation) so hopefully that 16K will last to make up the difference for a number of years.
Beyond that, it depends upon how risky you want to get with the money. You could set up a minor account, so at least you are not taxed on the money (the kid would be, but under the kiddie tax system).
Right now, tuition for my child in PreK-3 program at a Catholic school is $5200 ($1,000 more than tuition for all other grades because it's such a small size class). Next year, we have been told tuition is going up $200. So starting for Prek-4, tuition will be $4,400 per year. We probably will spend another $1,000 on various fees, uniforms, clothing, field trips, meals, etc.
So when the kid starts a PreK-4 program, you will have $16K in the bank (assuming no growth). The 4K coming in each year should cover most of the tuition expense for elementary school (although it will cover less each year due to inflation) so hopefully that 16K will last to make up the difference for a number of years.
Posted on 2/2/15 at 1:01 pm to LSUFanHouston
Thanks. We exceed the income requirements for a Coverdale. My wife is a teacher in the Episcopalian system and is dead set on sending the kids there, so my tuition will be much higher than the Catholic system in which I was raised. 
I will also have to contribute to make up for the difference.
But wouldn't the money from grandma be a gift and hence tax free?
I will also have to contribute to make up for the difference.
quote:
You could set up a minor account, so at least you are not taxed on the money (the kid would be, but under the kiddie tax system).
But wouldn't the money from grandma be a gift and hence tax free?
Posted on 2/2/15 at 1:24 pm to Motorboat
quote:
My wife is a teacher in the Episcopalian system
Ahhh. Yeah my kids go to Catholic school. I have a friend that works in one of the Episcopalian schools in Baton Rouge, and when she told me what they charge in tuition, I about fell out of my chair.
quote:
But wouldn't the money from grandma be a gift and hence tax free?
Yes, the gift would be tax free. I am speaking of any income earned on that money. Sorry for not specifying.
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