Do you have a 529 plan?

Do you have a 529 plan? Do you work with a financial advisor? Do you have a 529 plan that’s managed directly through your financial advisor?

If you answered yes to the first question, then that’s perfectly fine. If you answered yes to the second question, that’s great as well. However, if you answered yes to the third question, well, that’s where I tend to differ from a lot of financial advisors… and yes, that’s coming from a financial advisor.

Why you ask? Great question and certainly the meat and potatoes of this article.

But, let’s begin with the basics – what exactly is a 529 education savings account and why it might make sense for you to fund one for a family member’s college or K-12 educations costs.

The Basics Of A 529 Plan
According to,

“A 529 plan is a versatile savings account offering federal, and sometimes state, tax benefits, while minimizing the impact on financial aid. These plans are operated by a state or educational institution and are designed to help families set aside funds for future college and K-12 education costs.

“A 529 plan is an investment account that offers tax-free earnings growth and tax-free withdrawals when the funds are used to pay for qualified education expenses. For college, university, and other eligible post-secondary educational institutions, this includes tuition and fees, books and supplies, computers and sometimes room and board. The IRS also allows tax-free withdrawals of up to $10,000 per year, per beneficiary to pay for tuition expenses at private, public, and religious K-12 schools.”

While most people think of 529 plans as a savings account for education, there are actually two types of 529 plans.

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