529 Education Savings Plans: A Simple, Smart Way to Save for School

A 529 Education Savings Plan is one of the best ways to save for education - offering
tax-free growth and tax-free withdrawals when used for qualified expenses.

What Is It?

A 529 savings plan is an investment account for education expenses. You contribute
after-tax dollars, invest the money, and it grows tax-free. As long as your withdrawals go toward qualified education expenses, you won’t pay taxes on the earnings.

What Can You Use It For?

• College or K–12 tuition

• Room & board (if enrolled at least half-time)

• Books, laptops, internet

• Student loan repayment

  Contribution Limits

  There’s no strict annual limit, but contributions count as gifts:

• Up to $19,000/year per beneficiary (or $38,000 for married couples) without gift tax

• You can “front-load” up to $95,000 at once (or $190,000 as a couple)

  Tax Benefits

• Federal: Tax-free growth and withdrawals

• State: Many states offer tax deductions or credits for contributions

  What If You Don’t Use It?

• You have to pay taxes and a penalty on earnings on non-qualified uses of your 529

• The penalty is waived for scholarships, disability, or military academy
  attendance

• You can now roll the money over from your 529 into your Roth IRA (conditions
  apply), making this plan even more flexible!

  Overall

  Using a 529 plan to save for education, whether that be for your child, grandchild, or even yourself, is one of the smartest tools available. Start early, contribute regularly, and let your savings grow tax-free!

  If you think a 529 Education Savings plan would be a good fit for you or if you have any other questions about these plans contact us at 708-665-6663 or advisors@4wealthfg.com. Or, visit 4wealthadvisors.com/get-in-touch to fill out our contact form.