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I’d like to start a college fund for my grandchildren, but I want the funds to be able to transfer among them in case one of them does not use the money. Also I want to keep the fund in my name, not the parents’ names. How can I do this?


You’re in luck. There is a type of college saving account called a 529 plan that has just the features you’re looking for. You as the donor keep the account in your name and control how contributions are invested. You must designate a beneficiary – a student whose education you’d like to help finance – but you’re free to withdraw the assets from an account without penalty and deposit them in another student’s account. In your case, you might open accounts for each of your grandchildren and make the largest contributions to the older ones. If one of them doesn’t use his or her account, you can pull the money out and use it to top off the other accounts. Not only does a 529 provide flexibility; it confers tax advantages. Investment gains on contributions, which typically are kept in mutual funds or similar vehicles, accrue tax free, and many states allow an income tax deduction on the contributions.

-Conrad de Aenlle