Looking for a great way to invest in a child’s future? A tax-advantaged 529 college savings plan is specifically designed to help families save for future college expenses. It can make a big difference in helping a child achieve their education goals and career aspirations.
How does it work?
Although contributions to a 529 plan are not tax-deductible, the money is allowed to grow tax-free. When the funds are used for qualified education expenses such as tuition, room and board, books (and even certain K-12 costs), you don’t pay federal income taxes on the withdrawals. These plans can be tailored to fit your needs and provide flexibility, such as:
- Use at any accredited institution. Funds can be used at eligible colleges, universities, vocational schools, and even some international institutions.
- Control over the funds. The account owner retains control over how and when the funds are used.
- High contribution limits. Many plans have no annual contribution cap, and lifetime limits vary by state but are often substantial.
Key benefits
One of the biggest benefits of 529 plans is that you get to enjoy tax-free growth and withdrawals for qualified expenses (some states offer additional tax deductions or credits for contributions). In addition, if your beneficiary doesn’t end up needing the funds, you can transfer the account to another family member.
Who can open at 529 plan?
Parents, grandparents, godparents, aunts, uncles or even family friends can open and contribute to a 529 plan. You can also name anyone as the beneficiary.
Class dismissed
Just like with your 401(k) savings plan, the earlier you start, the more time your money has to grow. Even small, regular contributions can add up over time. For more information, check out savingforcollege.com. You’ll find information on state-specific 529 plan options and a comparison of different 529 plans, along with savings calculators and cost estimators.
Ready to start saving for college? Check out our College Savings Planning guide for more details and helpful information!
Informational Sources: savingforcollege.com
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
LPL Financial and its advisors are only offering educational services and cannot offer participants investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advisory services must be obtained on your own separate from this educational material.
©2025 Kmotion, Inc. All rights reserved. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.