Back to School: What You Should Know About 529 Plans

The cost of education continues to rise, making it more important than ever for parents and grandparents to think strategically about how they save for future education expenses. In this episode of “Well… It Depends!”, hosts Andrew Baron, CFP®, EA, and Derek Doyle explore 529 plans and other education savings options, including Coverdell ESAs and custodial accounts such as UGMAs and UTMAs. The conversation takes a closer look at why 529 plans have become such a widely used education savings tool, from their tax advantages and expanded list of qualified expenses to the flexibility they can provide as education needs change. Andrew and Derek also discuss several important 529 planning considerations, including the five-year election, annual gifting limits, K–12 education expenses, and what families can do if money remains in a 529 plan after a beneficiary's education is complete. Topics covered include: ✅ How 529 plans compare with Coverdell ESAs and custodial accounts ✅ Why 529 plans have become a popular education savings tool ✅ How tax-free growth and qualified withdrawals work ✅ What education expenses can be paid with 529 funds ✅ The five-year election and accelerated 529 contributions ✅ 2026 annual gifting limits and how they apply to 529 contributions ✅ Using 529 funds for K–12 education expenses ✅ What happens when a 529 plan is overfunded or has unused money ✅ Changing the beneficiary of a 529 plan ✅ Rolling eligible 529 funds into a Roth IRA ✅ Why starting education savings early can make a difference ✅ How parents and grandparents can incorporate 529 plans into their broader financial planning Saving for education isn't simply about putting money into an account and hoping it grows. It's about understanding how different savings vehicles work, taking advantage of available tax benefits, and considering how the funds may ultimately be used. Whether you're saving for a child, grandchild, or another family member, understanding how 529 plans work can help you make more informed decisions about preparing for future education expenses. 👍 If you found this episode helpful, Like, Subscribe, and turn on notifications for more educational content about retirement planning, investing, taxes, education savings, and everything money touches. Learn more about John G. Ullman & Associates: https://www.jgua.com 📅 Ready to discuss your financial goals? Schedule a meeting with our team: https://www.jgua.com/contact/ Disclaimer: The information discussed in this video is for educational purposes only and is not intended to be financial, tax, or legal advice. You should consult your financial, tax, and legal professionals before making decisions regarding your personal situation. ⏱️ Chapters [00:00] Introduction: Making the Most of 529 Plans and Education Savings [01:00] 529 Plans vs. Other Education Savings Accounts [02:00] Why 529 Plans Have Become So Popular [03:00] How 529 Plans Work & Their Tax Advantages [04:00] Qualified Education Expenses [05:00] The Five-Year Election & Superfunding a 529 [06:00] Annual Gifting Limits & 529 Contributions [07:00] K–12 Expenses & Recent 529 Changes [08:00] What Happens to Unused 529 Funds? [09:00] 529-to-Roth IRA Rollovers [10:00] The Rising Cost of Education [11:00] Why Starting Early Matters [12:00] Changing 529 Beneficiaries [13:00] Final Thoughts