Question 1

What is a 529 college savings plan?

Accepted Answer

A 529 plan is a tax-advantaged savings account designed to help families save for education expenses. Contributions grow tax-free, and withdrawals are tax-free when used for qualified education expenses such as tuition, room and board, and textbooks.

Question 2

How much should I save in a 529 plan?

Accepted Answer

The amount depends on the type of school, years until enrollment, and how much of the cost you want to cover. A good rule of thumb is to aim to cover at least two-thirds of projected costs. Starting early and contributing consistently, even small amounts, can make a significant difference thanks to compound growth.

Question 3

What happens to unused 529 funds?

Accepted Answer

Unused 529 funds can be transferred to another eligible family member, used for graduate school or K-12 tuition (up to $10,000/year), or as of 2024, rolled over to a Roth IRA for the beneficiary (up to $35,000 lifetime, subject to annual Roth contribution limits and a 15-year account age requirement).

529 College Savings

Assumptions

Projected Savings

Projected Total Cost

Coverage

Shortfall / Surplus

Savings Growth vs College Cost

Year-by-Year Projection