Leaving Something for Her

Lynn's 90-year-old father wants to leave something for her one-year-old daughter for college. He'd like to do it now in case he passes and it isn't done. Dave gives Lynn some options.

QUESTION: Lynn in Michigan is calling because her 90-year-old father wants to leave something for her one-year-old daughter for college. He’d like to do it now in case he passes and it isn’t done. Lynn’s father isn’t sure how much to leave but has suggested $10,000. Dave gives Lynn some options.

ANSWER: You can do up to $2,000 in an Education Savings Account. I suggest you put that in a good growth-stock mutual fund. Or you can do up to $10,000 into a 529 plan that grows tax-free when used for education. You can also put that into growth-stock mutual funds, which is exactly what I do there.