Life event \u2013 birth of my second child<\/strong><\/h2>\n\n\n\n

My second kid was born four years after the first one. I already had a decent chunk of money in my first kid\u2019s 529 plan. When I wanted to save for my second kid\u2019s college expenses, a natural question came to my mind – should I make monthly contributions for both kids into the same 529 account or keep separate accounts for each kid?<\/p>\n\n\n\n

One 529 fund<\/strong><\/h2>\n\n\n\n

With one 529 fund, you will keep things simple and uncomplicated by contributing to and monitoring just one college savings acct for all your kids. Less is more, right? One constraint with 529s is, at any given time, you can designate just one beneficiary to a 529 account. If your younger kid needs to use the money, then you will first have to change the beneficiary from the older to the younger kid so that he\/she can use the money. This may be a bit inconvenient especially if the age gap between your kids is less and they need to tap into the funds around the same time in college. Even if the age gap is more and there\u2019s not going to be an overlap of college years, it still makes sense to create separate accts as you will you see in the next section.<\/p>\n\n\n\n

Multiple 529 accts<\/strong><\/h2>\n\n\n\n

With multiple 529 accts, you will have a nice separation of concerns with each kid having his\/her own separate account. Yes, there is an overhead of managing multiple accounts but in matters of money, I believe it\u2019s better to have a segregation and spell things out rather than have a generic pool of money for multiple recipients.<\/p>\n\n\n\n

Also, most 529 plans are age or target enrollment based and they become less aggressive (less stocks) as your kid approaches college age. If the age gap between your kids is at least 3 yrs, then its best to keep separate accts with separate target dates so that the next kid can benefit from higher returns (assuming good market conditions) because his\/her target fund will be more aggressive than the older sibling\u2019s fund.  <\/p>\n\n\n\n

What did I do?<\/strong><\/h2>\n\n\n\n

I created a separate 529 acct for my second kid. I now have two Vanguard 529<\/a> Target Enrollment funds for each of my kids with an enrollment date four years apart. This gives my second kid\u2019s portfolio a slightly more aggressive allocation which may help with more gains by the time he hits college.<\/p>\n","protected":false},"excerpt":{"rendered":"

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