Table of contents
The guide
Chapter 1
Foreword
Six things most families get wrong about 529 accounts — starting with the fact that the money never stops being yours.
Chapter 2
Federal Plan Tip Summary
The whole federal framework in one place: control, deposits, taxes, K–12, college, life after graduation, and estate planning.
Chapter 3
Thirty Years of 529 Plans
How a state-capital experiment became federal law in 1996, and the eight expansions that followed it.
Chapter 4
State Plan Differences
Every state but Wyoming runs its own plan with its own rules. What actually varies, and what to check before choosing one.
Chapter 5
Account Basics
Owner, beneficiary, successor — who controls the money, how to change any of it without a fee, and every route for getting money in.
- 5.1You are in control.
- 5.2You are and will stay the owner of the 529 funds. Funds may be disbursed back to you at any time.
- 5.3You decide the beneficiary.
- 5.4Each account should have a Successor, in the case of the Owner’s death.
- 5.5You can decide to CHANGE your ownership to someone else without a fee at any time.
- 5.6You can decide to CHANGE the Beneficiary to someone else–including yourself–without a fee at any time.
- 5.7You can decide to CHANGE the Successor to someone else without a fee at any time.
- 5.8Account owners can have unlimited family and friend beneficiary accounts.
- 5.9Beneficiaries may have unlimited accounts in their name from different parents, grandparents, kind friends, etc.
- 5.10Deposits are made via direct payroll deposit, check, ACH, or wire. You can link your bank account for monthly or one time contributions.
- 5.11Employers, trusts, and other entities may contribute.
- 5.12Tax returns or PFDs can be directly gifted to the 529 plan.
- 5.13Special occasion gifts can be made by others for graduation, birthday, or other special days.
- 5.14Transfers may be made between accounts of family members.
- 5.15ABLE* accounts for disabled people may be rolled over up to $19,000 per year from a 529 plan.
Chapter 6
Understanding Tax Differences
Deduction or credit, tax-free growth, contribution ceilings and deadlines, and exactly what a non-qualified withdrawal costs you.
- 6.1In which state plan should I get an account?
- 6.2Is a Tax Deduction or Credit better for contributions?
- 6.3Understanding qualified tax-free growth–a major benefit of 529 accounts.
- 6.4There is a high maximum amount allowed in 529 accounts.
- 6.5Contribution deadlines correspond to the current calendar/tax year.
- 6.6Account Rollovers are allowed.
- 6.7Receiving Distributions
- 6.8For any non-qualified disbursement, any taxes or fees are ONLY on the earnings portion.
- 6.9Tax penalties on earnings are waived in some situations.
Chapter 7
Fund Selection & Distribution Logistics
Target-date against static allocations, the two-changes-a-year rule, the real risk of loss, and why starting early beats timing the market.
Chapter 8
Using the 529 for K–12
Private tuition, curriculum and software, tutors, therapies and test fees — plus the thirteen states that don't allow any of it.
- 8.1Not all states allow K-12 qualified distributions.
- 8.2You may pay for school tuition, books, and software through a 529 account.
- 8.3You may pay for a tutor through a 529 account.
- 8.4What is a “tutor”?
- 8.5Beneficiaries with disabilities can pay for treatments.
- 8.6High school age benefits include test fees and advanced course tuition.
Chapter 9
Post-Secondary School
Qualified schools, room and board, computers, apprenticeships, credentials and scholarships — and how a 529 affects financial aid.
- 9.1Getting a Plan
- 9.2How much should I help?
- 9.3What schools are “qualified”?
- 9.4529 accounts have limited effects on the need-based student aid calculation.
- 9.5You may pay for tuition, books, or fees with a 529 account.
- 9.6Registered apprenticeship expenses qualify.
- 9.7Postsecondary Credentialing, Certificates, or Licensing expenses qualify.
- 9.8What if your beneficiary receives a scholarship?
- 9.9You may pay for room and board if the student is enrolled one-half time.
- 9.10You may pay for computer hardware, software and internet access fees while enrolled.
- 9.11What may you NOT spend your 529 funds on?
- 9.12Account owners are responsible for keeping any documents that support a qualified or nonqualified withdrawal.
Chapter 10
After Graduation
Student loans, transfers down the family, the Roth rollover, and paying for licensing and continuing education across a whole career.
- 10.1You should consider leaving the account open after post secondary education is finished, as there remain many benefits.
- 10.2You may want your OWN account after college to pay for up to $10,000 qualified education loan principal or interest.
- 10.3You can repay a sibling’s student loans up to $10,000 as well.
- 10.4You may transfer any extra funds to a family member (younger sibling?, grandchild?) who needs them.
- 10.5You could consider establishing a “ladder of giving” approach for your children and then grandchildren.
- 10.6You may roll over any extra funds to a Roth for the beneficiary up to $35,000.
- 10.7You may pay for continuing education through a 529 account, the rest of your entire career.
- 10.8You may pay for extra credentialing, registered apprenticeship expenses, or certificates through a 529 account.
- 10.9You may pay for your Credentialing expenses or your occupational licensing through a 529 account, including years after graduation.
- 10.10You may pay for your licensing through a 529 account, throughout your career.
- 10.11You may want to close the account and pull excess funds out:
Chapter 11
Estate Planning
Completed gifts, superfunding, generation-skipping transfer tax, bankruptcy protection, and moving wealth across generations.
- 11.1Contributions to your 529 plans are considered “completed gifts” to the beneficiary.
- 11.2529 plans allow up to $190,000 to be contributed without gift tax at one time.
- 11.3A 529 account can help avoid the Generation-Skipping Transfer (GST) tax
- 11.4There is no Generation-Skipping Transfer (GST) tax on 529 distributions.
- 11.5There are no RMD’s or NIIT on 529 distributions
- 11.6There is bankruptcy protection through a 529 account.
- 11.7Multigenerational wealth transferred through superfunding the 529 account.
Chapter 12
Maximizing 529 Advantages
Five advanced playbooks — funding, K–12, post-secondary, after graduation, and estate planning.
Chapter 13
529 Plans Outperform the Alternatives
Head to head against prepaid tuition plans, Coverdell ESAs, UGMA/UTMA custodial accounts, and the new 530A “Trump account”.
- 13.1A 529 investment account is better than a prepaid tuition plan.
- 13.2A 529 account is better than a Coverdell ESA.
- 13.3A 529 account is better than a UGMA or UTMA account.
- 13.4A 529 account is better than a 530A “Trump account” child IRA.
- 13.5Multigenerational wealth transfer through super funding the 529 account.
- 13.6State Estate Tax Planning Differences
- 13.7Penalty-Free Exit Strategies for Unused Funds
- 13.8Summary
Appendices
Reference tables
The manuscript's three appendices, rebuilt as searchable, sortable data.