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And Baby Makes??ig Bills


A child is priceless??ut raising one can break the bank. Children born in the U.S. today will cost more than $338,000, on average, by the time they finish a public college. That's according to the parenting Web site BabyCenter (babycenter.com/cost-of-raising-child-calculator), based on College Board and Agriculture Dept. data. Send your precious offspring to a private college, and you can expect to shell out an additional $70,300 for tuition.

Broken down by region, the numbers show wide disparities. In the West, the total tab with private college tuition is $426,190, vs. $392,116 in the Midwest.

Think college is the only big tab? Just keeping a roof over junior's head will cost nearly $105,000 through age 18. Food will eat up $41,400, and health care, $17,400.

For strategies on paying for a family, check out BusinessWeek.com's special report "The Cost of Kids" at businessweek.com/go/07/kids.

The IRS has quietly posted a notice on its Web site that requires 401(k) plans, starting on Jan. 1, to allow children, siblings, unmarried partners, and other "nonspouse" beneficiaries to transfer 401(k) inheritances to an individual retirement account. That move allows heirs to stretch the withdrawals??nd the tax bills??hroughout their own lifetimes. Before this, some companies chose not to offer the option, instead making nonspouse beneficiaries withdraw all the money within five years of the account owner's death.

To be sure your bequest winds up in an account designated for your heirs, transfer your 401(k) money to an IRA upon retirement or when you leave your job. Among the reasons: "The IRS could always change its mind again about nonspouse rollovers" says Ed Slott, editor of the Ed Slott's IRA Advisor newsletter.

For all the fanfare about index and exchange-traded funds, investors still have a yen for old-fashioned mutual funds. Strategic Insight, a research and consulting firm, estimates that actively managed stock and bond funds will collect nearly $276 billion from investors this year. That's the best annual showing for active funds in nearly 15 years.

American Funds gets a lot of credit for the big inflows. Its funds, which are sold by brokers and tend to have consistently good returns, pulled in more than $57 billion for the year through Sept. 30, says Financial Research, a Boston consultant. Its two biggest sellers are Capital World Growth & Income Fund (CWGIX) and Growth Fund of America (AGTHX). "Advisers place a lot of trust in the firm," says Christine Benz, director of mutual fund analysis at Morningstar (MORN), the Chicago fund tracker. "It's a no-brainer destination for them."

But don't cry for the indexers: Vanguard Group, State Street Global Advisors, and Barclays Global Investors are all raking in cash, too, thanks to the explosion of exchange-traded funds and the continued popularity of index funds. Vanguard has seen inflows of more than $57 billion so far in 2007, according to Financial Research. That's more than twice as much as this time last year.


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