My brother is not working and waiting on social security disability approval. He has two small children 6 and 10, what is the best way for me to set up savings for their education so that it doesn't adversely impact his ssdi app or my tax situation? Coverdall? 529?

1 Answer 1


529 Plans vs Coverdell ESA is a question where I provided a brief answer of the difference of these two accounts.

For your situation, I'd add that the 529 offers you a layer of protection, in that the account can remain your property with the children as beneficiaries. In other words, should your brother's fortunes change, or should the kids get full scholarships, you can change the beneficiary back to yourself, and withdraw the money (Tax and penalty, but the money is still yours.)

Welcome to Money.SE. If you would like any clarification on my answer or others as they appear, just comment.

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    Should the other answer be inlined? Otherwise this answer is verging on being link-only. I think links that point to other answers are still discouraged on S.E. because there's still the perhaps remote risk of the other answer being deleted for some reason. Sep 10, 2014 at 11:45
  • @GaneshSittampalam: But if you copy it, there's a risk that one answer will be updated and the other not. Sep 10, 2014 at 15:40
  • @GaneshSittampalam - I answered how the difference can appeal to this situation, for a relative's child. I thought that was important, albeit, not comprehensive. Sep 10, 2014 at 16:38

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