Deciding to Fund a 529 College Savings Account
Figuring out how much to invest in a 529 plan? Consider these key planning elements:
Start by defining your education vision. Determine whether you're planning for K-12, college, or both, and establish preferences between private and public institutions. These choices create significant cost differences—potentially hundreds of thousands of dollars in required savings.
Always align education planning with your larger financial picture. Funds invested in a 529 account will be penalized if used for expenses outside of qualifying education costs. Make sure you’re comfortable with permanently assigning these funds to educational expenses.
Consider splitting contributions between 529 and brokerage accounts to take advantage of a 529 plan’s tax advantages while maintaining greater flexibility and avoiding penalties if your plans change.