Grandchildren's education fund

A: The number of tax-advantaged options for education savings has increased widely in recent years. The Grandchildren's Fund" might be set up as a Section 529 account or as a Uniform Trust to Minors Account or Education IRA or some other arrangement. Even a regular IRA account includes special tax provisions for withdrawals for college tuition. While the financial media tends to focus on 529 plans, these are not the best solution for the majority of middle-income families. The specific tax recommendation depends largely on the tax situation of you and your children. You should also be aware that despite the availability of all of these valuable tax tools, many grandparents conclude, after reviewing the various financial options, that the best way to help is an old-fashioned gift at the time that tuition is due. In many other situations, a combination of various types of accounts and strategies gives the best overall results. In your case, estate tax considerations may also play a part in the decision, since your grandchildren will be in college after the current estate tax laws are scheduled to expire. Again, this depends on your own financial situation. With so many possibilities and variables, it would make sense to get a side-by-side comparison of the effectiveness of each in your situation. I could probably give a specific written outline of the best options after a one hour consultation on the specifics of your situation.