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As usual, it depends on all of the facts and circumstances, including how much money you have to put aside, what other retirement resources you have available, and so on.

Roth contributions (just contributions, not earnings) can be withdrawn for any reason. As soon as the child has any earned income, matching it with a contribution to their Roth has some benefits. One, is that currently retirement assets are not generally considered when determining financial aid. So, by putting the money into a Roth instead of a 529 your student may be eligible for more financial aid. Also, if they do not need the money for college, it is available for a home, their future retirement, or to be left to their heirs. Obviously this works better the earlier you can get started. I am matching my 9 year old's lawn-mowing income and depositing it into a Roth for him. While I absolutely agree that you can borrow for school but not for retirement, if it is the child's Roth we are talking about and your needs are fully funded, they will have time to fund their own retirement after college. Your kids may not have enough earned income to make a big difference, but if you pick the right stocks for them, they just might.

If you are already maxing out your Roth (and your spouse's) for your own retirement, obviously you cannot add more for your child's schooling. And if your child has no earned income you cannot add to a Roth for them. In that case a 529 may be worthwhile.

This is just a small look into the pertinent factors. Who knows how tax and financial aid rules will change in the future? How much do you trust your child? If they do not go to college do you want the money back? There is a lot to consider, so giving a pat answer in this forum is not likely to be a good idea. But I do agree that it is worth considering.

Foolish regards,

ancora imparo
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