Should You Start a 529 College-Savings Plan for an Unborn Baby?

How soon should you start saving for a kid’s college tuition? When they enroll in elementary school, maybe? Or even when they’re born? How about when their parents are still in school?

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Not a bad idea, The Wall Street Journal says.

Thinking about college for a baby who hasn’t yet been conceived or even imagined — much less born — might seem like jumping the gun by a good mile or two. For families who know that children are almost certainly in store for the future, though, the idea does have merit.

Consider the incentive for starting early. A four-year private-college education currently costs an average of around $165,000 — a figure that’s expected to rise by 3.7% every year. You can imagine how impossible a high-caliber education might seem twenty or thirty years from now when your future grandchildren are ready to enroll.

That’s why 529 college-savings plans are starting earlier than ever these days — and not just by parents. Increasingly, grandparents are the ones getting the ball rolling. It’s a huge help to their children, who may struggle in those early years when forming a family of their own. And, as the Journal reminds grandparents, there are some strategic tax-planning benefits too.

So when’s the sweet spot? The Journal mentions five years as a potential starting point. (That’s five years pre-birth, mind you, not five years old). Ultimately, it’s a decision to be informed by your financial standing and your family’s outlook.

One thing is for sure: waiting until after a baby is born to start a college fund means that several years of potential savings have been wasted away. As with any kind of savings account, it’s generally better to have one than to not.

If you’re interested in the idea of starting a 529 college-savings plan sooner than later, an experienced Phoenix estate planning attorney at Kamper, Estrada, and Simmons, LLP can answer your questions and advise you on the best strategies. Give us a call today.

One thought on “Should You Start a 529 College-Savings Plan for an Unborn Baby?”

  1. Thanks for great info, I was wondering if it also can be one of the items to check before the couple ties the knot, super important I may add, will share this with the couples we are working too.

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