Consider a 529 Plan for College Expenses

529 Plans are a popular vehicle for funding college expenses. They are easy to set up, have many benefits, and few drawbacks.

529 Plan Drawbacks

The only drawbacks are that 529 Plans can only be funded with cash, not investments, and they affect college financial aid, but only a little bitmuch less than if the assets were given directly to your beneficiary. Unless youre going to stuff your 8 year olds mattress, there isnt a better way to save for college because of the many benefits.

529 Plan Benefits

Plan assets grow tax deferred and are distributed federal tax free so long as the assets are used to pay approved college expenses.
Some 529 Plan distributions may be excluded from state income tax; it depends on the state.
A trust can own a 529 Plan thereby providing asset protection, avoiding probate, preventing court interference, and providing a succession of control.
You can superfund a 529 Plan, meaning that you can deposit up to $65,000 (or $130,000, if youre married) into a plan in one year, using that years and the next four years annual gift tax exclusion.
Anybody can contribute to a 529 Plan that you set up. For example, grandparents, aunts and uncles, friends, and parents can all contribute to the same plan to benefit your beneficiary.
The owner of the plan can be changed at any time without incurring gift or other transfer tax.
The beneficiary can be changed to a related beneficiary if your beneficiary doesnt go to college or you change your mind.
If your beneficiary obtains a scholarship, the assets can be switched to another beneficiary or withdrawn without penalty.
You can choose from almost any states 529 Plan so you can control costs, fees, investments, and tax consequences.
529 Plans are low maintenance and dont take a lot of attention; you can invest based on your beneficiarys age and your risk tolerance and set up automatic investment payments.
You dont need to work through a financial advisor to open a 529 Plan, unless you want to.