🎓 May 29th is National 529 Day
A 529 College Savings Plan is one of the most effective ways to invest in a child’s education. Here’s why a 529 Plan is a smart and flexible choice:
Tax-Free Growth & Withdrawals Earnings grow tax-deferred, and withdrawals for qualified education expenses are tax-free.
State Tax Deduction Certain states offer a state income tax deduction for residents who fund a 529 sponsored by their state.
Covers More Than Just College Funds can be used for K-12 private school tuition, trade schools, apprenticeships, and even student loan repayment (up to limits).
High Contribution Limits Save more with generous contribution caps—perfect for long-term planning.
No Income Restrictions
Anyone can contribute, regardless of income level.
Account Owner Control
You maintain control of the account, even when the beneficiary reaches adulthood.
Transferable Funds
Unused funds can be transferred to another eligible family member.
Estate Planning Benefits
Contributions may reduce your taxable estate, and you can front-load up to five years’ worth of gifts without triggering gift taxes.
Low Maintenance, High Impact
Many plans offer low fees, automatic investment options, and age-based portfolios that adjust as your child grows.
Encourages Family Involvement
Friends and relatives can contribute, making birthdays and holidays more meaningful.
Peace of Mind
Start small or go big—every dollar saved is a step closer to a debt-free education.
Roth IRA Rollover (Effective 2024)
Unused 529 plan funds can roll into a Roth IRA for the same beneficiary tax-and penalty-free. See criteria below:
- 15-Year Rule: The 529 account must have been open for at least 15 years.
- No Changing Beneficiaries: Changing the beneficiary may reset the 15-yearclock.
- 5-Year Rule: Contributions (and their earnings) made in the last 5 years are not eligible for rollover.
- Lifetime Limit: You can roll over up to $35,000 per beneficiary over their lifetime.
- Annual Limits Apply: Rollovers count toward the annual Roth IRA contribution limit ($7,000 in 2025).
- Earned Income Required: The beneficiary must have earned income equal to or greater than the amount being rolled over in that year.
529 plans come with fees and expenses. There is a risk they may lose money or under perform. Most states offer their own 529 programs, which may provide benefits exclusively for their residents. Consider whether the state plan offers any tax or other benefits. Tax implications can vary significantly from state to state.
Call or email us with any questions on 529s for your children or grandchildren.
Matthew Foster CFP®, CEPA®
Partner, Axia Wealth AdvisorsFinancial Advisor, RJFS
CERTIFIED FINANCIAL PLANNER Professional
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