529 plans aren’t just college savings accounts; they’re a unique way to invest in someone’s future while potentially gaining tax advantages for your family today. And when used wisely, they can be a powerful part of your broader financial plan
Why Starting Early Matters
The sooner you fund a 529, the more time the investments have to grow tax-free. Plus, you can front-load contributions for an even bigger head start.
Private School vs. College
While 529s can now be used for K–12 private tuition, that doesn’t mean it’s always the best move. The trade-off? Less time for compound growth and potentially shortchanging college goals.
What to Do If You Overfund
Got more saved than one student needs? You have options – like switching beneficiaries or rolling funds into a Roth IRA (under certain conditions).
Don’t Forget Estate Planning
529s are owned by an adult and must be accounted for in your estate. Naming a successor owner is a key step many families miss.
Whether you’re planning for your child, grandchild, or thinking about your legacy, 529s can be both a gift and a smart strategy. Financial planning doesn’t have to be a big deal – just a thoughtful one.
Ready to talk about how a 529 fits into your financial picture? Let’s start the conversation.
Any opinions are those of the author, are subject to change without notice and are not necessarily those of Raymond James. This material is being provided for information purposes only, is not a complete description and does not constitute a recommendation.
Certain conditions may apply. Earnings in 529 plans are not subject to federal tax, and in most cases, state tax, so long as you use withdrawals for eligible education expenses, such as tuition and room and board. However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. Investors should consider, before investing, whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 college savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state. You should discuss any tax or legal matters with the appropriate professional.
