BRIDGEPORT, W.Va (WDTV)- Question: I just found out a few months ago that we are having a baby, I would like to go ahead and open up a 529 college savings plan. Is this possible?
Answer (John Halterman, Beacon Wealth Management): "Sophie, congratulations. I love the idea that you’re having a baby. I know for myself, having three children has been one of the greatest joys of my life.
In terms of a 529 plan, I also love the fact that you are thinking ahead because one thing I know about money is the quicker you get started, the more money that’s going to compound for you. With college being such a short window it is really important to get started sooner.
I have some news for you, unfortunately a 529 plan requires a Social Security number for the beneficiary. With an unborn child you cannot actually open a 529 plan in the name of that particular child."
Question: What are the other options?
Answer (John Halterman, Beacon Wealth Management): "Well, that’s the technical rule. But let me tell you a story about what my wife and I did. I’m in this business so I understood the rules very well. One of the things I said was that, when we found out we were having our first child, Liza, we open a 529 plan in my wife’s name because a 529 plan is very flexible so it gives you the ability to transfer the beneficiaries.
Once Liza was born and we got a Social Security number for her, we basically transferred the beneficiary from my wife to her. What that allowed was for us to put savings away, get a head start on that, and then just transfer the beneficiary down the road.
It is a little bit of extra paperwork, a little bit of circumventing it, but it definitely gives you a chance to save early."