What You Need to Know About 529 Plans – On 5/29 and Beyond

ByAshley Hours Categories College Planning

May 29th marks 529 Day, a great reminder to think ahead when it comes to one of the biggest expenses many families face: education.

Whether you’re a new parent thinking about college down the road, a grandparent wanting to contribute to your family’s future, or simply someone trying to better understand your financial options — a 529 plan might be one of the most effective tools available to you.

A 529 plan is a tax-advantaged investment account specifically designed to help individuals and families save for education. Originally created for college savings, the rules have evolved ini recent years, due to the Secure Act 2.0 and future tax laws to include K-12 tuition, apprenticeship programs, and even student loan repayment (up to certain limits).

Here are some key benefits:

  • Tax-Free Growth: Contributions grow tax-free, and withdrawals are tax-free when used for qualified education expenses.
  • State Tax Perks: Many states offer deductions or credits for contributions to their own 529 plans.
  • Flexibility: If the child you’re saving for doesn’t need the funds, you can transfer the account to another eligible beneficiary/family member without penalty.
  • High Contribution Limits: Unlike some savings vehicles, 529 plans allow for large contributions over time.
  • Anyone Can Contribute: Parents, grandparents, relatives, even friends can contribute.

The cost of education continues to rise. Starting early — even with small, consistent contributions — can make a significant difference down the road. And taking advantage of the tax advantages can also be impactful to your financial plan while also saving for your children or grandchildren’s futures.

It’s not just about college anymore either. 529 plans can now be used for the following, amongst others:

  • K-12 private school tuition (up to $10,000/year)
  • Trade schools and vocational programs
  • Student loan repayments (up to $10,000)
  • Some expenses for apprenticeships

If you’re not sure whether you have the right plan in place — or if you’re even using your 529 plan to its full potential — now is the perfect time to review it. The earlier you begin, the more time your investments have to grow.Want to talk through your options? We’re here to help you navigate the details and build a plan that fits your family’s goals. Email info@shermanwealth.com or schedule a complimentary intro call here.