Kids Education Advice

Hi everyone,I have 2 kids one is 3 years and the other one 3 weeks, I've been thinking about opening an a account for their college education. So far they have 5K on their piggy bank. What I'm looking for is an account to save with good interest, but also gives me the option to use the money in case of an Emergency (you never know) thank goodness so far I don't have that emergency, so I can save a little money for their college Education. I read a little about the 529 but I don't think is the righ one for us? thanks

If you aren't maxing out your Roth IRA, this might be a good place to put the extra money (but you shouldn't replace your retirement savings for your kid's education savings in my opinion). Once the Roth has been open for 4 years, you can take the principal amounts invested out without penalty in the case of an emergency. If you're just looking for some extra interest on the money while keeping it completely liquid, Emigrant Direct is paying 4% on their savings accounts.
_____________________________
Financial Baby Steps (http://financialbabysteps.blogspot.com/) Blog

Just a point of clarification: you can take out principal from a Roth at any time - there is no 4-yr waiting period.

That being said, savingadvice is right, don't sacrifice your retirement for your child's education.

I am a proponent of 529 plans - especially if you live in a state where your contributions are tax-deductible.
go to www.savingforcollege.com for more info on 529 plans

Yeah, no waiting period on the principal in a Roth. Pull it at any time for any reason. But your kids can take out a loan to pay for college, and you can't do the same for your retirement. Think twice (three times, if necessary) before cashing out your retirement to pay for something like this.

Oooops, sorry for the 4 year mistake...not sure where I got that into my head. Thank you for the correction.
____________________
Financial Baby Steps (http://financialbabysteps.blogspot.com/)

Taking money from a ROTH IRA, comes out in a specific order.
- First out is our annual contributions. We have already paid the tax on these contributions, so they come out tax and penalty free at any time we choose. However let us not forget this is a retirement fund.
- Second to come out is our ROTH Converted amounts. Here we must wait for a 5 year period before we can take the funds penalty free. We paid the tax when we did the conversion, but to keep us from wanting a penalty free distribution from a TIRA, we must wait the 5 years. Doing a conversion anytime in 2004, we could get these funds penalty free January 1, 2009 (so it could be days over 4 years). However if we reach age 59.5 years during this 5 year clock, the clock stops and the penalty is not applied.
- Last to come out of the ROTH IRA is growth. Taking a distributin of our growth before we reach age 59.5 the distribution is subject to tax and 10% penalty. Again after age 59.5 years, there is no tax or penalty on distributions from our ROTH IRA.

i agree that you should not sacrifice your retirement fund for your children's college. its simple as they can get loans for college

i agree that you should not sacrifice your retirement fund for your children's college. its simple as they can get loans for college
Where did you read that ? :eek:

That is actually common financial advice, although not followed by all. The theory being: Your kids can borrow for college and pay it back as they enter the work force, but you and I cannot borrow for retirement and pay it back during retirement.

Although it is a goal of every parent to assist their child(ren) in attending college, a parent should not sacrifice their own financial future in doing so, thereby becoming a burden on those same children. A parent that cannot afford to send their child(ren) through college should still nurture them, and advise them to do their best in grade and high school achieve academic scholarships to facilitate further education.

Where did you read that ? :eek:
You are not agree? Why?