Title: Maximizing Your Wealth: How 529 Plans Can Supercharge Your College Savings
Are you looking for a smart way to save for your child’s education while also maximizing your wealth? Look no further than 529 plans, which offer a range of benefits and flexibility to help you reach your savings goals. At Extreme Investor Network, we believe in empowering our readers with unique insights and strategies to secure their financial futures. Let’s dive into how 529 plans can supercharge your college savings.
Flexibility ‘motivates’ 529 funding
Recent changes to 529 plans have made them even more attractive to savers. The ability to roll over funds into a Roth IRA has had a significant impact on parents’ decisions to open a 529 plan. In fact, 23% of parents cited this flexibility as a key factor in opening an account, according to a report by Saving For College. Additionally, 76% of those without a 529 plan stated that this benefit makes them more likely to open an account.
Moreover, the introduction of 529-to-Roth rollovers has spurred existing account holders to increase their contributions. This newfound flexibility has motivated families to invest more in their 529 plans, knowing that they can potentially use the funds for non-education expenses as well.
529-to-Roth rollovers are ‘icing on the cake’
Traditionally, 529 plan withdrawals were limited to qualified education expenses. However, recent changes have expanded the usage to include various educational expenses beyond traditional college costs. The introduction of 529-to-Roth rollovers now offers even more flexibility to account holders, allowing them to potentially use the funds for other purposes if needed.
This newfound flexibility has addressed concerns about overfunding 529 accounts and provides a valuable option for families looking to maximize their savings potential. The potential to roll over contributions into a Roth IRA adds another layer of versatility to 529 plans, making them a more attractive option for education savers.
Total investments in 529s hit $508 billion
The popularity of 529 plans continues to grow, with total investments reaching $508 billion in 2024. More parents are opting to utilize 529 college savings plans, with recurring contributions becoming the norm. The increase in investments can be attributed in part to the new changes and benefits offered by 529 plans, making them a compelling choice for families looking to secure their children’s future education.
How much you can contribute to a 529 plan
Individuals can now gift up to $18,000 (or $36,000 for married couples filing jointly) per child without impacting their lifetime gift tax exemption. Grandparents also have the opportunity to contribute to a grandchild’s college fund without affecting their financial aid eligibility, thanks to a new loophole. High-net-worth families can explore the option of “superfunding” 529 accounts, allowing them to frontload five years’ worth of tax-free gifts into a 529 plan.
By maximizing your contributions and taking advantage of the various benefits and flexibilities offered by 529 plans, you can supercharge your college savings and build a solid foundation for your child’s education. Stay informed and empowered with Extreme Investor Network as we continue to provide unique insights and strategies to help you achieve financial success. Subscribe to our newsletter for the latest updates and tips on personal finance and wealth management.