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Setting up a 529 for an unborn child

Posted by Andrew Chan  July 1, 2010 02:00 PM

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My husband and I are planning on starting a family during the next couple of years. Can we set up a 529 account and contribute funds to it for our unborn child today?

In order to set up a 529 college savings plan account, you will need to name a beneficiary of the account and provide their Social Security number. Unborn children cannot be named as beneficiaries of 529 accounts. However, you can set up a 529 account for your or your husband’s future education expenses and name you or your husband as the beneficiary. Once your child is born and you’ve obtained a Social Security number for him/her, you can change the beneficiary designation of your account to your child.

From an overall financial planning standpoint, I would generally encourage you to make sure that your other financial goals are in order before funding a 529 account for your unborn child. For example, making sure that you have an adequate amount saved for your emergency fund and paying down any consumer debt are important considerations especially during these uncertain economic times. While 529 plans are a great way to save for college there are disadvantages if you need to tap these funds for non-educational expenses.

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