Mantra "Pay yourself first" is great for education savings. Automatic contribution depending upon how much one can contribute will certainly help in shaping a kid's future. Talk to your financial advisor for asset allocation and understand your risk tolerance, you don't want to lose money in a stock market meltdown when your kid is just few years away from college.
Link to IRS web site explaining in detail about coverdell IRA: http://www.irs.gov/publications/p970/ch07.html
Here is a sample list of Coverdell ESA custodian with fee and contribution limits. I've opened a Coverdell ESA in Schwab, due to low fee and better investment choices.
Source : http://SavingForCollege.com
ESA Sponsor | Custodian | Account Fee | Minimum Contribution | Account Type |
|---|---|---|---|---|
| Gabelli Funds | State Street Bank and Trust | None | None | Mutual Funds |
| Madison Mosaic Funds | U.S. Bank NA | Waived with automatic contributions (otherwise $12.50 - $25) | $100 per month with auto contribution | Mutual Funds |
| Mairs and Power Funds | U.S. Bank N.A. | None | $1,000 | Mutual Funds |
| Janus | State Street Bank and Trust | None | $1000, or $500 with a $100/mo automatic contribution | Mutual Funds |
| Oakmark Funds | State Street Bank and Trust | $5 installation and $7/year | $500 per fund | Mutual Funds |
| TIAA-CREF | State Street Bank and Trust | None | $2,000 | Mutual Funds |
| T. Rowe Price | T. Rowe Price Trust Company | $10/year, waived with $5,000 balance | $1,000 per fund, or $50/mo. automatic contributions | Mutual Funds |
| Vanguard | Vanguard Fiduciary Trust Company | $20 annually, waived with electronic access and delivery, and $25/fund fee for redemption within 3 years | $2,000, or $1,000 in the Vanguard STAR Fund | Mutual Funds |
| E*Trade | Not Determined | None if electing online statements | $1,000 | Discount Brokerage |
| Scottrade | Scottrade, Inc. | None | $500 | Discount Brokerage |
| TD Ameritrade | Ameritrade, Inc. | None | $1,000 | Discount Brokerage |
| Charles Schwab & Co. | Charles Schwab & Co. Inc. | None ($20 if account balance is below $2,000) | $2,000 | Discount Brokerage |
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