Our financial consultants say you should have one plan for each child if you have multiples, mainly because if all of the kids attend college at the same time, you will be making withdrawals at the same time and you cannot withdraw from one plan for multiple people at the same time.
If you have money left over after the children have attended college, you can then transfer Child A’s balance to Child B, who may have decided to go on for a Master’s degree. Or you can let the unused balance sit until you have a grandchild, then transfer the balance to him or her. The money can also be used for an adult returning to school and a few other purposes.
Bottom Line: If you have one person at a time using the funds, then one 529 plan is fine; it can be a “rolling” plan. But with multiples, each child needs his or her own plan.
Don’t forget that if you sign up for your state’s plan, you can deduct your 529 plan contributions on your state tax return. In New York for example, it’s up to $10,000 annually, which means contributing a little over $3,000, or less, to triplets during the year.
But shop around. If your state’s plan is not so great, you can open a 529 in another state. You just won’t get the tax deduction. So you will have to weigh the better returns in the other state against the tax deduction in your state.
Also the UPromise program can help you save a little money for college. The money is free (it works like cash back on credit cards) and deposited directly into your 529 plan. And yes, you can split your UPromise funds between more than one plan for multiple children. Grandparents and other family members or friends can sign up for UPromise too and their free money can be split among each of your 529 plans also.