Declaring taxes by minors on savings bonds saves at cash-in time


Many parents have been using the popular 529 Plan to set money aside to pay for their childrens' college education. However, I know some parents who are not too happy about their money being tied up in a 529 plan now that it has come time for them to pay the actual tuition. With the stock market down almost 50% from its high in October 2007, it's likely your 529 Plan has been taking hits with no end in sight.

On the flip side, owners of U.S. Savings Bonds have experienced only increases in value no matter how much the market has fluctuated over the past months or year. In fact, some Savings Bond owners are holding bonds earning as much as 8.52% annually in tax-deferred investments.

But what about the tax breaks you get from a 529 Plan? That rule should help them out perform the savings bonds even in such a turbulent market, right?... Wrong...