Paying for a child’s college education is a goal many parents and grandparents share. And while 529 plans are far from perfect, they remain one of the better tools for the job.
But your father’s 529 plan is not the same as today’s plans. 529s have become a lot more flexible. Once limited to paying for college tuition and expenses, 529 plans can now cover K–12 expenses and apprenticeships as well as jump-start retirement savings through Roth IRA rollovers.
That flexibility is a plus—but it also makes following the rules more complicated.
Because I like to make an example of my own finances, I’ll disclose that I’ve set up and funded a 529 plan for my son. I’ll do the same for my daughter before the year is out—she's only a few weeks old. I’ve also contributed to my niece’s 529. So yes—I’m a believer.
But 529 plans aren’t as simple as they look. Let’s dig in.