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on Jan 10, 2014 12:31 PM by yanushkevich
something worth sharing
on Jan 10, 2014 12:31 PM
For the past 25 years I have been gifting my grandkids first via a UGMA then my own children converted the UGMA into 529 Coverdell accounts. While one does not have many investment options under the 529 plans, the advantage is that the money earned is collected tax free by the recipient, when that money is used for educational purposes.
I now have found a better solution which I would like to share. My Tiaa-Cref advisor introduced me to "Deferred Annuities", essentially just like an IRA, without having to take mandatory distributions or pay taxes on the gains, until the money is taken out.
I am now putting after tax money into such annuities, and naming my grandkids as beneficiaries. There will be taxes to pay when the money is taken out, either by myself, or by my grandkids should they become beneficiaries.
like IRA's there is a withdrawal penalty before age 59.5 and the annuity will have to be annuitized past age 90, that being raised to 95 in 2014.
Hope this gives some other generous grandparents an option for the education of their progeny.
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