Question

I have one child, one on the way, and my husband and I plan to adopt two more children within the next ten years. That puts us at four kiddos and possibly four college educations. We have some money in an account for our oldest and we are starting to save for baby number two. (Retirement savings are already squared away). I want to move the money from the low interest savings account to something more impactful. I am concerned about the 529 plans because of all the restrictions. I am currently active duty Army, but will return home to AL in two years. Can the money from the AL 529 be used in any state or does it have to be used for an AL school? If we choose not to do a 529, what’s the next best option?  

Answer 1

529 accounts can be used anywhere. You can also use any state’s 529 programs. If you choose not to do a 529 i would suggest investing into a total stock market ETF in an after tax brokerage account.  

Answer 2

Also, with four children, chances are better that at least one of them will go to college, and transferring between siblings (even any other relative) is very simple. Lastly, even if you have to pay taxes and penalties if no one goes to college, you'd have to pay taxes in a regular savings or brokerage account anyway AND both the taxes and 10% penalty is ONLY on the gains not the entire amount.