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I am 42 yr old and have decided to use a Roth IRA as one of the vehicles to save for my 20 mo old son's college education. However, I am confused about whether I should directly opened an account with the mutual fund company [lets say Janus] or use a broker [which I do not have]. What is the best route for me to take?
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However, I am confused about whether I should directly opened an account with the mutual fund company [lets say Janus] or use a broker [which I do not have]. What is the best route for me to take?

This one really falls under personal choice. It is really the same question you would ask for any investment you plan to keep for 15 years.

Jacki
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jsesler,

Hello, and welcome to the Fool! I hope you find it as helpful and educational as I do.

I assume you have read some of the pros and cons of using a Roth IRA as a saving-for-college vehicle and have based your decision to use one on that information. So I will skip the lecture about why an IRA might not be the best way to save for college.

Anyway, what are your particular concerns in the "mutual fund company vs. broker" question? Are you planning to use a mutual fund for the entire 17 or so years you pump money into this? Or will you fund it with stocks once a couple of years have passed and you have enough money in there to make it work?

If you provide more background the very helpful Fools on the board will certainly be able to provide more concrete advice!

JCKelly
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Actually, I wouldn't mind hearing the pros and cons of the Roth for saving. I only saw a few on the board. I know I am limited to $2000, but I figured I could put the first $2000 and then use a non-tax free route after that. You also tell me more about the 529 plans?


My plan for college saving is go aggressive for say 6-7 yr, then add in some bonds and reduce the stocks [probably a 20-30%/80-70% split, respectively] Then change the mix again when we get closer to the pay for college.
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Actually, I wouldn't mind hearing the pros and cons of the Roth for saving. I only saw a few on the board. I know I am limited to $2000, but I figured I could put the first $2000 and then use a non-tax free route after that. You also tell me more about the 529 plans?

The con is that you are using a retirement vehicle to save for college - if you have other ways to save for retirement, it may not be an issue.

For 529 information, you should hit 529fan's website at :
http://www.savingforcollege.com/links.htm
Keep in mind that the 529 information changes often.

Jacki
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I currently have a 403b account through work plus a tax deferred saving plan since I work at a nonprofit institution.
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I currently have a 403b account at my place of employement and a tax deferred savings place since the place is a nonprofit institution.
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Actually, I wouldn't mind hearing the pros and cons of the Roth for saving.

As Jackie (RecoveringFool) mentioned, the cons are that you will have to redirect money that COULD be used for retirement and instead use it for college.

Specifically, you can only contribute $2000 a year. The tax breaks of the IRA mean that the longer you keep it in the IRA the more benefit you get -- so you are better of using the IRA for retirement, and leaving your money in there UNTIL retirement. If you know you have money to use for college, you might not want to "use up" your IRA with the college money, and instead save it for the longer-term retirement money.

I actually think this is very good logic and wouldn't use an IRA for my son's education savings.

But others will provide different opinions - and in the end you will have to make the best decision for you and your family!

JCKelly
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