Hope this is in the proper forum . . .

[JustinTyme]

What is the name of your state?-- Pennsylvania --
My son and his wife recently had a baby, this is my first grandchild. I'd like to set up a fund of some type for him, which can be used to help with future educational costs. My son and I do not get along, since his mom and I divorced eight years ago. My son wasn't aware of the circumstances of the divorce, and hasn't spoken to me in almost eight years. I don't see a reason to " punish " the child because of his father's stubborness. Friends have suggested that I purchase a CD or set up an account in MY name, which can be transfered to my grandson at some future time.
My questions are:
A ) What type of Account would be best ?
B ) At what age would it be appropriate to transfer these funds to my grandson ?

Thanks for a reply / Sorry if this is in the section.

 

[BelizeBreeze]

What is the name of your state?-- Pennsylvania --
My son and his wife recently had a baby, this is my first grandchild. I'd like to set up a fund of some type for him, which can be used to help with future educational costs. My son and I do not get along, since his mom and I divorced eight years ago. My son wasn't aware of the circumstances of the divorce, and hasn't spoken to me in almost eight years. I don't see a reason to " punish " the child because of his father's stubborness. Friends have suggested that I purchase a CD or set up an account in MY name, which can be transfered to my grandson at some future time.
My questions are:
A ) What type of Account would be best ?
B ) At what age would it be appropriate to transfer these funds to my grandson ?

Thanks for a reply / Sorry if this is in the section.

The decision to invest for your grandson's future is a personal one. It will (or should) be based on how much you want to invest, the tax implications to the beneficiary at the time of conversion and the purpose of the monies.

You need to sit down with a financial planner to discuss all of these (and more) issues before making such a decision.

I can tell you however that there are many (if not all) states which have begun educational trust accounts so that you can invest for your grandson's education with no tax consequences to him and very favoritable ones for you.

 

[anteater]

I think Belize was referring to 529 College Savings Plans and/or Coverdell Education Savings Accounts. A good resource to see if this is the way you might want to go is:

http://www.savingforcollege.com/

 

[JustinTyme]

Thanx for the reply

Thank you both for the information , and especcially the link to college savings !!

 

[anteater]

Unfortunately, PA is not as 529 plan-freindly as other states:

-- No state income tax deduction
-- Wants to tax the earnings on withdrawals if you use another state's plan
-- The exemption from PA's inheritance tax is only if you are using PA's plan
-- PA's investment-type plan from Delaware Investments is high cost and largely mediocre

But the prepaid tuition-type plan (GSP) is interesting.