Understanding 529 Plans: Flexible Education Savings

The cost of education continues to rise, making it more important than ever to plan ahead. From tuition and housing to books and supplies, future education expenses can add up quickly. Watch this quick 2-minute video to learn how a 529 Plan can help you prepare by offering a flexible, tax advantaged way to save for education.

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A white slide shows the text, “College is expensive and costs keep rising,” in dark blue. The word “expensive” is bolded, with a small orange diagonal line to the left for emphasis.	College is expensive and costs keep rising.
A white slide displays the text, “That doesn’t mean it’s out of reach for your family,” in dark blue. A small orange diagonal line appears to the left of the text as a design accent.	That doesn’t mean it’s out of reach for your family. The key is to start planning now.
A light blue slide displays the question, “What is a 529 Plan?” in dark blue text. To the right, there is a simple illustration of a smiling piggy bank with a dollar sign, representing savings.	A 529 plan can help. It’s an education savings account sponsored by your state that lets you invest and grow the money you save to send your kids to school.
A peach-colored slide titled “College Savings Plan” lists four bullet points: tuition, housing, books, and supplies. To the right, simple icons show steps moving upward toward a target with an arrow, symbolizing progress toward a savings goal.	The most common version is the College Savings Plan, which is often used to help students pay for the costs of education—tuition, housing, and even books and supplies.
A white slide reads, “The 529 Plan advantage: Gains are tax free.” To the right, an illustration shows a person climbing upward on stacked dollar bills, holding a box with a dollar sign, symbolizing financial growth.	There are many advantages to opening a 529 Plan account. The first, most important benefit is the opportunity to grow your education savings without paying taxes on the gains.
A white slide lists “The 529 Plan advantage:” followed by two points: “Gains are tax free” and “Financial aid is still possible,” with the second point emphasized. To the right, simple illustrations include a piggy bank with coins and an umbrella, symbolizing protected savings.	Second, a 529 Plan is not weighted as heavily in need-based financial aid calculations, helping your student qualify for more grants and scholarships.
A white slide lists “The 529 Plan advantage:” followed by three points: “Gains are tax free,” “Financial aid is still possible,” and “Your funds are flexible,” with the third point emphasized. To the right, an illustration shows a hand slicing a stack of dollars, representing flexible use of funds.	Third, 529 Plans are flexible. You don’t have to spend your savings until you’re ready. And if one child needs less money than expected, you can transfer the remaining funds to another child.
A white slide asks, “Annual Gift‑Tax Limits for 529 Plans,” followed by bullet points: “Individual: nineteen thousand dollars,” “Couples: thirty‑eight thousand dollars,” and “Families can ‘Super Fund.’” Below, additional text reads, “States also set account balance limits.”	While 529 plans don’t have a federal contribution limit, gift tax rules do apply. Families can use the annual gift tax exclusion or super fund up to five years in one lump sum. Most states also set maximum account balance limits per beneficiary.
A light blue slide asks, “What if you have extra funds?” Below, smaller text explains, “You can withdraw money for non-educational purposes,” followed by a note that taxes and penalties may apply.	But what if you put in more money than you end up needing for school? You can withdraw money from your account for non-educational purposes, but you’ll likely pay taxes and penalties on the gains.
A peach-colored slide reads, “You can roll extra dollars into a Roth IRA.” Bullet points state, “Up to seven thousand five hundred dollars annually,” and “Thirty‑five thousand dollar lifetime limit.” Smaller text notes, “Limits are age‑based.” A simple illustration shows a person pushing a wheelbarrow filled with dollar signs.	Instead, you may want to roll those dollars into a Roth IRA for your child over time. You can move up to a lifetime limit of $35,000 to an IRA as long as your 529 Plan has been open for at least 15 years.
A light blue slide states, “529 Plan dollars can be used for:” followed by three bullet points: K‑12 education, paying off student loans, and out‑of‑state schools.	You can also use your 529 Plan funds for K-through-12 education and student loan repayment. And though these plans are state sponsored, you’re not limited to in-state schools.
A peach-colored slide reads, “Lock in your advantage.” Below it, smaller text says, “The sooner you start saving, the more time your savings have to grow.” To the right, an illustration shows a person watering a tree made of dollar signs, symbolizing long-term financial growth.	A 529 Plan offers powerful tax advantages and flexibility to help your family prepare for future education costs. The sooner you start saving, the more time your savings have to grow, allowing you to be better prepared when the time comes.
A white slide reads “How do you prioritize your savings?”	But many parents face a tough question: save for retirement, or save for a child’s college education? The general rule is to prioritize your retirement savings first, because there are more ways to pay for college than for retirement.
The screen shows a white background with the word “Fisher\SMB” centered. “Fisher” appears in dark blue, followed by a orange diagonal slash. “SMB” appears in dark blue to the right of the slash.	Fisher\SMB is here to help you plan for your future. To learn more about your savings opportunities, contact our retirement specialists at 888-322-7586 or contact401k@frs.net.
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