Uncle wants to invest in his Nieces

[ReadytoLearn]

Well the holidays are here and I've started to look into investing in my nieces' future....I have 2 of them.  The first thought is always a savings bond, but I'd need their SS#s, and thus ruin the surprise to their parents.  As a single guy who is ChildFree, I've never looked into 529 plans.  What routes have you taken in the past?  Thanks!

[Rubic]

Well the holidays are here and I've started to look into investing in my nieces' future....I have 2 of them.  The first thought is always a savings bond, but I'd need their SS#s, and thus ruin the surprise to their parents.  As a single guy who is ChildFree, I've never looked into 529 plans.  What routes have you taken in the past?  Thanks!

You'll need their SSN's regardless.  I'm also child free and have been investing into
my nieces and nephews' futures for some time.  Just coordinate with their parents on
setting up the accounts and don't worry about the "surprise" factor -- it's much too
important for that.

Now that 3 of the urchins are old enough to start earning money -- but not yet old
enough to pay income taxes -- I'm encouraging them to open Roth IRA accounts
by offering matching contributions.  I see this as a way to get their fuzzy heads
wrapped around the concept of financial independence.  Oh, and copies of
JL Collins' "The Simple Path to Wealth" as Christmas gifts this year. ;-)

[ReadytoLearn]

OK, I've asked their parents for their SSNs, thanks.  They are <3yrs old, would you start with 529 or is there some other recommended vehicle these days?

Well the holidays are here and I've started to look into investing in my nieces' future....I have 2 of them.  The first thought is always a savings bond, but I'd need their SS#s, and thus ruin the surprise to their parents.  As a single guy who is ChildFree, I've never looked into 529 plans.  What routes have you taken in the past?  Thanks!

You'll need their SSN's regardless.  I'm also child free and have been investing into
my nieces and nephews' futures for some time.  Just coordinate with their parents on
setting up the accounts and don't worry about the "surprise" factor -- it's much too
important for that.

Now that 3 of the urchins are old enough to start earning money -- but not yet old
enough to pay income taxes -- I'm encouraging them to open Roth IRA accounts
by offering matching contributions.  I see this as a way to get their fuzzy heads
wrapped around the concept of financial independence.  Oh, and copies of
JL Collins' "The Simple Path to Wealth" as Christmas gifts this year. ;-)

[mindy]

I don't personally recommend 529 plans. My husband had one from his father, but then he joined the military and didn't use the money for college so we had to pay taxes on it when we took it out. You never know if the child is going to go to college or do something else like join the military or just start working, so I would recommend going a more general route with savings bonds.

[Rubic]

OK, I've asked their parents for their SSNs, thanks.  They are <3yrs old, would you start with 529 or is there some other recommended vehicle these days?

I think a 529 plan is a wonderful vehicle for you to provide a lasting
gift for your nieces.  There's a wealth [pun intended] of information
available on the Internet:

http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/05/01/help-nieces-nephews-save-for-college
http://www.morganstanley.com/ideas/five-things-about-529s
http://www.jhwfs.com/5-most-frequently-asked-529-plan-questions/

[MikeW]

Posting to follow this thread.

I am in a similar situation. I have ruled out 529's because I would like to keep options opened. Camp, dance class, field trips, etc.
Does anyone have experience with Kiss Trust Funds??

[tonysemail]

Posting to follow this thread.

I am in a similar situation. I have ruled out 529's because I would like to keep options opened. Camp, dance class, field trips, etc.
Does anyone have experience with Kiss Trust Funds??

Kiss trust is covered here-
http://forum.mrmoneymustache.com/investor-alley/kiss-trust-has-sent-a-legal-threat-to-this-blog/


529 accounts are a frequent topic on this forum.
another thread on it-
http://forum.mrmoneymustache.com/ask-a-mustachian/529-college-savings-plan-vs-custodial-acocunt/

my in-laws preferred a custodial account mainly so the kids could spend it on a car or something like it.

If I had a sibling nice enough to give us cash, I'd sock it away in a 529 too.

[Acorns]

We have a 529 for our kids, I figure between all of them someone will use it, even if they get scholarships/join the military/don't go to college for some reason. A family member has set up a UTMA for each of my kids as well. Not sure how much is in that, but I figure it is nice to have in addition to the 529.

[Ricksun]

In regards to the 529 Plan, it's important to note that the account is in the contributor's name.  The beneficiary can be the Niece/Nephew, but it's still your account to manage.  Kind of makes a weird gift of sorts; saying you contributed to a 529 Plan that you yourself control and then need to make disbursements against once the kids reach college age.  If you want to do this, I'd recommend sending the money to the parents with the intention to contribute it to a 529 plan.  They would potentially get whatever state tax break might be applicable instead of you.

Savings bonds are tangible (actually I think they're all electronic now), but are lower interest rates.  THis is likely coming 2 weeks too late and you've already done the research to figure this out yourself...

Ricksun

[boarder42]

I don't personally recommend 529 plans. My husband had one from his father, but then he joined the military and didn't use the money for college so we had to pay taxes on it when we took it out. You never know if the child is going to go to college or do something else like join the military or just start working, so I would recommend going a more general route with savings bonds.

its just normal income tax at that point.  if they use it for school great its like tax free earnings similar to a roth if they dont its just like a taxable account.

[better late]

In regards to the 529 Plan, it's important to note that the account is in the contributor's name.  The beneficiary can be the Niece/Nephew, but it's still your account to manage. 

We set up a 529 account so the owner is my DH and the beneficiary is my DD.  Similar situation, DD's uncle and grandparents put $ in there every year. In essence we created the envelope and they are putting $ into it.

[I'm a red panda]

Well the holidays are here and I've started to look into investing in my nieces' future....I have 2 of them.  The first thought is always a savings bond, but I'd need their SS#s, and thus ruin the surprise to their parents.  As a single guy who is ChildFree, I've never looked into 529 plans.  What routes have you taken in the past?  Thanks!

The interest on savings bonds is terrible now. I wouldn't go that direction.

If you do a 529, keep in mind it does not have to be in the state you, or they, live in.