Unless you have enough money to make the maximum contribution to a Roth IRA and still save money for your children's education, then a Roth IRA must be your priority. The Roth can be used for your own retirement and it also can be used to pay for higher education expenses for you or your family members. Further, a Roth IRA can also double as an emergency account. That's because you can withdraw the contributions (but not the earnings) at any time without tax liability or penalties.
In 2008, you can deposit up to $5,000 in a Roth IRA; more if you're age 50 or older. If you have more than $5,000 that you can save, then put $5,000 in the Roth and the rest in a 529 plan.
Between the two goals, saving for your retirement needs to be your priority. Your kids don't want you to live with them when you're old.
|||529. You would have to save in YOUR Roth IRA. Your kids can't contribute to IRAs in their names unless they have earned income.
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