Many parents and grandparents wisely start putting away funds to pay college tuition almost as soon as a child is born. But what's the best way to do it?

Custodial accounts, under the Uniform Gift to Minors Act, were popular a generation ago. At that time, any gains and dividends were taxed at the child's low tax rates; now, investment income over $2,000 for children under 19—or full-time students under 24—is taxed at the parent's higher rate. More: because the money in a custodial account belongs to the youngster, it becomes an issue on a financial aid form.

A 529, though, grows tax-deferred and earnings can be used tax-free for qualified college costs. Anyone can open such accounts, and some states offer state-tax deductions for the account owners. Multiple accounts can be opened for a child, and excess

funds can be rolled over for the benefit of family members.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.