“So… where should we put the college money?”

It’s a question we hear more often than you might think. Sometimes it comes right after the baby shower, when a generous grandparent slides over a check with a wink. Other times it shows up with a bit more urgency—right after high school orientation, when those tuition numbers start to feel real.

Whether you’re starting early or playing catch-up, the first step is figuring out where to save. And that’s where things can get a little fuzzy. Should you open a 529? What about a UTMA account? Or is it okay to just keep it in a good old-fashioned savings account?

Let’s break it down.

The 529 Plan: Designed for Education, Built for Growth

If college is the goal (or private school, or trade school, or grad school), the 529 plan is often the MVP.

A 529 is a tax-advantaged investment account specifically built to cover qualified education expenses. That includes tuition, books, computers, room and board, and even up to $10,000 per year in K-12 tuition.

Here’s what makes it compelling:

• Tax-free growth: You contribute after-tax dollars, but the investments grow tax-deferred and can be withdrawn tax-free if used for education.
• High contribution limits: You can stash a lot—up to the annual gift tax exclusion each year, or even front-load five years at once.
• You stay in control: Even though you’re saving for a child or grandchild, the account stays in your name. If they don’t go to college, you can change the beneficiary or use it for another family member.

There’s also a nice bonus in some states: state tax deductions or credits for contributions. (Arizona, for example, offers a deduction if you use its state plan. We always recommend checking with your tax advisor.)

Downsides? The main one is flexibility. If you use the funds for something that doesn’t qualify—say, a down payment on a house—you’ll owe income tax and a 10% penalty on the earnings portion of the withdrawal.

The UTMA Account: A Gift With Strings (That You Can’t Untie)

UTMA stands for Uniform Transfers to Minors Act—and while that sounds like legal soup, the idea is pretty straightforward.

A UTMA is a custodial account set up for a minor, but unlike a 529, the money can be used for anything. That means education, yes—but also a car, travel, or anything else that benefits the child.

Here’s where things get interesting:

• Flexibility: The money doesn’t have to go toward school. That’s a plus if you’re unsure what path the child will take.
• Tax treatment: Earnings over a certain threshold are taxed under the “kiddie tax” rules—essentially at the parent’s tax rate instead of the child’s. So while it’s not tax-free, it can be tax-favorable depending on how much income it generates.
• Inevitable control: Once the child reaches the age of majority (usually 18 or 21 depending on your state), the account becomes theirs. Legally. Fully. They can do what they want with it—even if that doesn’t include school.

That last part is worth repeating. If you’re hoping the money will go to tuition, but your 21-year-old has a motorcycle in mind, there’s not much you can do to stop it. For some families, that lack of control is a dealbreaker.

The Good Ol’ Savings Account: Simple… But Slow

There’s a comforting simplicity to just tucking the money into a savings account at your local bank. It’s accessible, FDIC-insured, and earns a little interest. But… that’s about it.

Here’s the deal:

• No tax benefits: You’ll pay taxes on the interest each year.
• Low returns: Even with higher interest rates recently, savings accounts can’t compete with long-term investment growth.
• Best for short-term or backup needs: If you need the money in a year or two, or you want a small emergency stash, a savings account makes sense. But for a multi-year goal like college tuition? It’s just not going to keep up.

That said, some clients do use savings accounts as a supplemental layer—keeping a small fund liquid while the bulk of the education savings grows in a 529 or UTMA.

“What’s the Best Option?”—It Depends (Really)

Here’s the truth most articles don’t say: there’s no universal “best.” The right tool depends on your goals, your values, your tax situation, and even your child’s personality.

Let’s run through a few examples we’ve seen with clients:

• The grandparents who want to set up a legacy fund → 529 plans make sense here, especially if they want to retain control and avoid gifting cash directly to minors.
• A single parent who’s unsure if college is in the cards → A UTMA might offer more flexibility—but paired with a modest 529 in case things change.
• Parents who want to teach money lessons along the way → We’ve seen families open both: a 529 for school, a UTMA for the child to manage and learn from, and a savings account for those “in-the-meantime” purchases.

And don’t forget: your own financial plan matters. We always remind families—funding college should never come at the expense of funding your retirement. You can borrow for school. You can’t borrow for the last 30 years of your life.

Our Take: How We Help Families Decide

At Suttle Crossland, we don’t just look at numbers—we look at people. That includes:

• What kind of future you want to give your child
• What trade-offs you’re willing to make
• Whether others (like grandparents or godparents) want to contribute
• How education funding fits into your overall plan—not just a one-off goal

We also help with logistics: selecting which state’s 529 plan fits you best (hint: it’s not always your own), choosing age-based investment portfolios, and making sure accounts are titled correctly to avoid headaches later.

Closing Thoughts: It’s Not Just About Saving—It’s About Intention

At the end of the day, this isn’t just a math problem. It’s a values conversation.

Saving for a child’s education is about more than tuition—it’s about showing them that we believe in their future. That we’re setting aside a piece of today to give them choices tomorrow.

Whether you’re saving $500 or $50,000, how you save sends a message.

Let’s make sure it’s the right one.

Curious which account is right for your family? Let’s talk. Schedule a conversation with us here, and we’ll walk through your options—without jargon, pressure, or assumptions.