529 versus coverdell

[kv968]

alas right now we can only save $2k year per kid. Perhaps in the future when we have more disposable income.

If you can only do $2k/yr, aren't concerned with possible state tax savings and want more investment flexibility, then I'd go the Coverdell route.

If so, I'd look at either Schwab or TD Ameritrade for opening an account. Both have decent commission-free ETF's available and no maintenace fees. TD is the better of the two IMO with their commission-free ETF selection since they use some of Vanguard's, SPDR's, iShares and Powershares ETF's.

[Jerry91]

Well, I would vouch for 529 Plan. The 529 plan offers easy and affordable option to save money for college. The money that you keep here is federal and state income tax free. Withdrawal of money for qualified higher education is also tax free. The money from this savings plan can be used for studying in any accredited college in the country.

[kv968]

The money that you keep here is federal and state income tax free.

Just to be clear, its only state income tax-free if you use your own state's 529 plan (which in some cases can be quite expensive comparatively).