529 College Account or a tradtional savings account for new baby?

Ok, so Liam has gotten some checks already made out to him so as soon as we get his SSN in the mail, we'll be opening an account for him (also being he'll get some cash gifts for his christening in April).

Which is better, a 529 College Savings Account or a traditional savings account? I think the 529 is great, but you can only withdraw money for education, correct? So in 17 years if Liam wants to withdraw money for a car, he couldn't do so with out penalties, correct?

Also, lastly, do credit unions have better savings accounts than traditional banks right now? My husband could now get him an account at Teacher's Federal Credit Union because of his job.

Thanks

Message edited 2/11/2009 9:19:06 AM.

Re: 529 College Account or a tradtional savings account for new baby?

We decided to do both. We opened up a 529 account for her and we put money in it every month and so do my ILs.

We also opened a savings account because my parents opened one for me when I was younger and once I turned 18 the money was mine. I used it for books and living expenses while I was away at college. It was really nice to have. We also contribute monthly to that as well.

Re: 529 College Account or a tradtional savings account for new baby?

Here is a link to a blog post that I bookmarked when researching this info for our DS:

LINK

It helps explain the pros and cons of opening a 529, Coverdell IRA and savings account for your child. Hope this helps!