Smart Saving for the School Year:
How 529 Plans Support Education
and Estate Planning
Backpacks? Check. Notebooks? Check. Crayons, calculators, and lunchboxes? Check, check, and check. As
families scramble to wrap up their back-to-school shopping, one item that rarely makes it onto the supply list
(but absolutely should) is a 529 plan. While it may not fit in a backpack, this tax-advantaged savings account is
one of the smartest tools available for funding education at every stage.
So whether you're planning for private school, college, or even apprenticeships, a 529 plan helps you invest in
your child's future while making the most of your money today.
What is a 529 Plan?
A 529 plan is a tax-advantaged savings account designed to help families prepare for education expenses.
Named after Section 529 of the Internal Revenue Code 1 , these plans offer a powerful way to save for the
future, whether that means private elementary school, college, or even certain apprenticeship programs. Key
benefits include:
1. Tax-Free Growth
Money in a 529 plan grows tax-deferred and can be withdrawn tax-free at the
federal level (and often at the state level) for qualified education expenses like tuition, books, fees,
room and board, and supplies. 2
2. Broad Eligibility
Anyone (parents, grandparents, or even friends) can open or contribute to a 529 plan
for a beneficiary with a Social Security or Tax ID number.
Wide Range of Uses
These funds can cover:
- K–12 tuition (up to $10,000 per year)
- Certain apprenticeship programs registered with the U.S. Department of Labor 3
- Up to $10,000 in student loan repayment for the beneficiary and their siblings
Back-to-school season is the perfect time to evaluate how a 529 plan might support your
family’s education goals, and your long-term financial plan.
1. Education Savings Plans: Work like investment accounts, with growth based on market performance.
2. Prepaid Tuition Plans: Let you lock in today’s tuition prices for select schools, which can be helpful if
you’re concerned about inflation.
What Happens If You Don’t Use the Funds for Education?
Withdrawals for non-qualified expenses are subject to income tax on the earnings, plus a 10% federal penalty.
However, recent updates allow for greater flexibility. For example, unused funds may now be rolled into a Roth IRA for the
beneficiary, up to $35,000, subject to certain conditions.
How 529 Plans Fit Into Legacy Planning
529 plans aren't just for saving: they can be a strategic tool in a well-structured legacy plan. Here’s how:
- Annual Gifting with Tax Advantages: In 2025, individuals can contribute up to $19,000 per
beneficiary per year without triggering gift taxes. Married couples can gift jointly for a total of $38,000
per beneficiary annually.
- Superfunding: You can “front-load” five years’ worth of contributions in a single year 4 , up to $95,000
per individual or $190,000 per married couple. This accelerates tax-free growth and reduces your
taxable estate.
- Account Control: The account owner (not the beneficiary) retains full control of the assets, including
the power to change the beneficiary or even withdraw funds if needed (though taxes and penalties may
apply for non-qualified uses).
- Legacy Planning: You can open separate accounts for multiple beneficiaries, ensuring education
funds are available across generations. Remaining balances can be passed on, continuing your
educational legacy.
Final Thoughts
Back-to-school season is the perfect time to evaluate how a 529 plan might support your family’s education
goals, and your long-term financial plan. Whether you're a parent thinking about tuition next year or a
grandparent planning a legacy, a well-structured 529 plan can deliver both flexibility and tax efficiency.
Want help integrating 529 planning into your broader wealth strategy? Your Intrua advisor can guide you
through the right approach based on your family’s needs, your state’s rules, and your legacy goals.
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s
home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection
from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals
used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult
with your tax advisor before investing.
1 https://www.investopedia.com/terms/1/529plan.asp
2 https://www.invesco.com/education-savings/en/collegebound-529/insights/back-to-school.html
3 https://www.savingforcollege.com/article/529-plan-pay-apprenticeship
4 https://individuals.voya.com/document/practice-management/maximizing-value-529-plans.pdf