Pure’s Senior Financial Advisor, Robert Canavan, CFP®, AIF®, provides recent updates on 529 accounts and dispels inaccurate misconceptions to help you get the most out of these plans.
Transcript
If you’re saving for a child’s college, chances are you’ve heard of a 529 plan. When used correctly, they’re one of the most powerful tools available to you. But if you plan on taking advantage of one of these accounts, it’s worth knowing some recent updates and a few of the common misconceptions around 529 plans.
First, what is a 529 plan? It’s essentially a tax-advantaged education savings plan that allows money to grow tax-deferred. That money can be withdrawn tax-free when used for qualified expenses. Qualified expenses include tuition, books, housing, supplies, and things like that. 529 accounts are designed to help families save for the future cost of education.1
Did you know that under the SECURE 2.0 Act, unused 529 funds can be rolled into a Roth IRA for the beneficiary? You may be able to roll over up to $35,000 from a 529 account into a beneficiary’s Roth IRA.1 That is a huge deal, because one of the biggest hesitations families had about 529s was the fear of over-saving. That concern is largely off the table now.
Another update worth knowing: grandparent-owned 529s used to hurt a student’s financial aid eligibility when funds were withdrawn. That’s no longer the case following recent FAFSA changes. So if a grandparent wants to contribute toward college, a 529 is now a much cleaner way to do it.
Now for the misconceptions. A lot of parents think 529 funds can only be used for a four-year university, but that’s not true. In fact, they can be used for community college, trade schools, and even K-12 schools in certain states. Also, you don’t need to use your own state 529 plan; you can shop around for the best available option for you.
The bottom line is 529s are flexible, tax-advantaged, and more forgiving than ever. If you want to learn more about 529 plans, estimating costs, or how to build a plan that funds your child’s education without derailing your own financial goals, download our free guide on College Funding right now by scanning the code on your screen.
Finally, if you’re considering a 529 or already have one and want to optimize it, reach out to schedule your free financial assessment. In this one-on-one meeting with Pure Financial Advisors, we’ll assess your current financial situation and give you feedback on how you can achieve your financial goals.
Source:
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Charles Schwab. “What Is a 529 Account? How It Works and Tax Rules.” January 28, 2026. https://www.schwab.com/learn/story/saving-college-529-college-savings-plans.
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CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
AIF® – The AIF® designation, administered by the Center for Fiduciary Studies fi360, certifies that the recipient has specialized knowledge of fiduciary standards of care and their application to the investment management process. To receive the AIF Designation, the individual must meet prerequisite criteria based on a combination of education, relevant industry experience, and/or ongoing professional development, complete a training program, successfully pass a comprehensive, closed-book final examination under the supervision of a proctor and agree to abide by the Code of Ethics and Conduct Standards. Six hours of continuing education is required annually to maintain the designation.
