Account For Child That Relatives Can Contribute To?

[arebelspy]

What's the best/easiest way (online preferred) to make some sort of account for our kid that relatives can contribute to?

Not sure if we should set up some sort of tax-deductible college fund, or just a savings account, or what.  But basically we have relatives wanting to get her gifts, and we don't need anything, so it'd be nice to say "put money into this thing" (or, at worst, "give us the money and we'll put it in").

Thoughts?

EDIT: Found this: http://forum.mrmoneymustache.com/mini-money-mustaches/account-for-an-infant/

Basically suggests Capital One sub-accounts or 529, but fairly little discussion or details on exact accounts.  Does no one do this?

[Doubleh]

We went for a 529 for exactly these occasions. We're not saving into college specific funds ourselves, preferring to cover fees if they come out of our general state. So we won't end up with a huge amount in 529 that can't be used, and we assume that our girls will do enough education to use what they do have. We've also found that it being a college fund carries weight with family, and they are probably more eager to contribute than if it were just a general savings account.

We don't have any state tax implications to worry about so looked for the cheapest management and went with Utah state plan. Lots of cheap Vanguard fund options and very easy to set up and manage online.

[arebelspy]

We went for a 529 for exactly these occasions. We're not saving into college specific funds ourselves, preferring to cover fees if they come out of our general state. So we won't end up with a huge amount in 529 that can't be used, and we assume that our girls will do enough education to use what they do have. We've also found that it being a college fund carries weight with family, and they are probably more eager to contribute than if it were just a general savings account.

We don't have any state tax implications to worry about so looked for the cheapest management and went with Utah state plan. Lots of cheap Vanguard fund options and very easy to set up and manage online.

You just signed up here then: https://www.uesp.org/ ?

[Doubleh]

Yep thats the one.

We had Grandma open the account in her name with our daughter as the beneficiary; I believe there are pros and cons to having the parent vs grandparent "own" the account but in our case it was partly for convenience as we live overseas

[MakeSmarterDecisions]

I was listening to Clark Howard a few weeks ago and he just updated his 529 guide too in case you want to take a look at that.
http://www.clark.com/clarks-529-plan-guide

[Prairie Stash]

Canada here, slight differences.

For my kids I have a savings account set up for each that contains birthday money, gifts and oddball amounts. The accounts have under $1000 and generate modest amounts of interest. As they get older I'll switch them to GIC's and other stable products and use them as an example of real life investing. I find math is easier to learn when dealing with real money and not hypotheticals, even as a kid. The GIC's are because as a kid I don't want them turned off investing in a bad year; I'm not sure how they'll react to a 20% stock drop at age 12. In Canada there's benefits to having kids earn income but no drawbacks, later on my kids will have a small amount of extra RRSP (401K) room, it rolls over here and is based upon annual earnings.

My first "investment" was a savings bond my Grandma gave me. It was $200 and worth more in education than any money I earned from it. Childhood savings should also focus on education, not just returns. 

I have a separate education account (RESP - similar to 529) with my money going in to fund their school. If its not used for school I would have been better off having a private investment account set up in their name. The key is to have their accounts attributed to them so any earnings are taxed in their hands and not mine. I can control the accounts, I don't want to be paying taxes on their money though.

[MrsDinero]

We went for a 529 for exactly these occasions. We're not saving into college specific funds ourselves, preferring to cover fees if they come out of our general state. So we won't end up with a huge amount in 529 that can't be used, and we assume that our girls will do enough education to use what they do have. We've also found that it being a college fund carries weight with family, and they are probably more eager to contribute than if it were just a general savings account.

We don't have any state tax implications to worry about so looked for the cheapest management and went with Utah state plan. Lots of cheap Vanguard fund options and very easy to set up and manage online.

+1

This is what we are planning on doing. 

[tonysemail]

it seems like a question that comes up a lot.
here are some other threads-
http://forum.mrmoneymustache.com/ask-a-mustachian/help-with-how-(where)-to-save-for-kid's-college!
http://forum.mrmoneymustache.com/ask-a-mustachian/i-want-to-invest-for-my-niece-or-nephew-how-should-i-go-about-this

A 529 is a fairly convenient way with little downside.
Custodial accounts were a pain to open.
Faxing... a lot of faxing in this day and age :(

[seattlecyclone]

Some 529 accounts allow for gift contributions. California's "ScholarShare" plan has a form your family members would fill out and send in with a check. Their investments seem to be priced lower than the Vanguard-branded plan as well.

[Slow&Steady]

You just signed up here then: https://www.uesp.org/ ?

This is what we use to.  Once it was set up I emailed the gift link to grandparents and asked that they limit toys/clothes and instead gave gifts that would contribute to college expenses.  Only 1 of them have listened at this point but that is a different topic.

[Thegoblinchief]

We have custodial brokerage accounts for each kid with Charles Schwab. $100 minimum open. They're a UTMA type account.

Considered 529 but want kids to have flexibility if they don't pursue college.

[MamaNueva27]

There's an online bank called SmartyPig that offers savings accounts with 1% interest and it gives you the option to let friends and family contribute towards goals. I know this is not the best of options for return on your money, but it allows people to contribute and allows you to spend it on whatever you want, whereas 529 has restrictions. I use it for short-term savings while I decide what I want to do with my money and so I can make lump-sum contributions to my daughter's 529 because it still gets better interest than my regular bank's savings accounts!

[arebelspy]

We have custodial brokerage accounts for each kid with Charles Schwab. $100 minimum open. They're a UTMA type account.

Thanks!  That structure sounds perfect.

An investment account is ideal, I'm meh on the 529 idea, despite potential tax savings.

Anyone else use something similar to this and have it to recommend (so I can compare, e.g. maintenance fees, available funds to invest in, etc.)?

in the meantime.. time to start the research!

Thanks GC!

EDIT: Actually, this looks pretty close to perfect.  Nice!
https://www.schwab.com/public/schwab/investing/accounts_products/accounts/college_savings/custodial_account

EDIT 2: Spoke with them on the phone, and just filled out and uploaded the application. Thanks again GC!

[Thegoblinchief]

You're welcome :) Previous to that I only knew about Vanguard's UGMA but those are $3K minimum. Fellow Mustachian and real life friend Luthien recommended Schwab to me as she uses it for her 4 kids.

I've found the accounts easy to use. Only complaint is that I can't nickname the accounts in the dashboard so I have to look up which kid is which account number when depositing.

[arebelspy]

I've found the accounts easy to use. Only complaint is that I can't nickname the accounts in the dashboard so I have to look up which kid is which account number when depositing.

The lady on the phone specifically told me you can rename them (so like "kid 1" "kid 2" was her example), so it doesn't get confusing which is which.  So perhaps that's a new feature/change since you last checked?

[Thegoblinchief]

I've found the accounts easy to use. Only complaint is that I can't nickname the accounts in the dashboard so I have to look up which kid is which account number when depositing.

The lady on the phone specifically told me you can rename them (so like "kid 1" "kid 2" was her example), so it doesn't get confusing which is which.  So perhaps that's a new feature/change since you last checked?

Okay, cool, figured it out just now - thanks! It probably was there and just didn't see it in the interface at first.