I mentioned in the last article that I would be opening two Education Savings Accounts – one for my son and one for my daughter.Â I had been planning to open the accounts with Vanguard – the same brokerage that has my SEP-IRA – but I’ve decided to stick with TD Ameritrade – the brokerage where I already have my oldest daughter’s ESA.Â While I really like Vanguard’s services, TD Ameritrade offers ESAs with no minimum contributions.Â Vanguard, on the other hand, requires a $1000 minimum initial investment.Â Right now, I just don’t have $2000 (for 2 accounts) sitting around,Â and I don’t want to wait to open the accounts.Â TD Ameritrade offers several no-transaction-fee index funds, my preferred investment options.
Strangely, TD Ameritrade does not allow users to open ESAs online.Â Instead, you must print (or request by mail) account application forms and then mail them back to TD Ameritrade.Â I printed out two sets of the forms, one for my son and one for my daughter, and I’m going to mail them tomorrow.
It feels good to have this done.Â Now, all I have to do is fund the accounts!
5 thoughts on “Sticking With TD Ameritrade”
TD Ameritrade is an excellent choice, so congrats on opening two new accounts.
The only caveat I can offer is the potential savings of combing accounts with Vanguard for those folks who qualify for Admiral Class shares, where the management fees are virtually non-existent (~0.1%)
@Matt SF I actually asked them about that… and the csr told me that all of the accounts would be “separate” in that the amounts in my kids accounts would belong to them… so, the amounts would not be added together for admiral class consideration…
I forget if you’ve already answered this, but why are you opening an ESA instead of a 529? Do you plan on sending your kids to private school on the K-12 level?
@Mike I like the flexibility of the ESA… and the fact that I could, if needed, use it for K-12 expenses… plus, if i have extra, i can also open 529 plans…
Are there any disadvantages to funding an ESA before a 529? It’s been a while since I looked into the rules for both of them, but I’ve been pretty happy w/my daughter’s 529 at Vanguard. It might be time for me to look into the rules for each of them again to see if I should continue w/the 529 or start an ESA too.
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