<p>I agree with CTScoutmom that a Roth should be funded first, up to $5k. She points out that the critical piece of information is that after a Roth account has been open for 5 years, the contributed money (NOT any earnings however) can be withdrawn anytime for any purpose. Be careful however, since if you pull money out of the Roth during your child’s freshman year it will be counted as income on FAFSA and CSS. It is better to use bridge loans until the senior year of your youngest child.</p>
<p>If you already contribute $5k to a Roth and still want to save more, I would suggest using the Coverdell. I appreciate the flexibility and control that these accounts offer. You should not have any account fees if you open your account with one of the national, low-fee providers such as Fidelity, Schwab, etc. I personally don’t like being locked in to a state bureacrat’s (or worse, politician’s) idea of asset allocation and diversification which are inevitable in a 529.</p>
<p>If you are already saving $5k in a Roth for you and your spouse, plus $2k in a Coverdell for each child and you still have money you want to save, then a 529 probably makes sense as the next best option.</p>