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529s are becoming more than just a college savings tool

Updated: Oct 24

In the past 529s were thought of as only a college savings tool. That is still their primary use, but in recent years these accounts have been granted more flexibility making them more than just college savings vehicles.

I’ve compiled a list of 529 ‘highlights’ (this is not meant to be an exhaustive list of all of their features or their rules):

  • Contributions to a 529 can be invested in stocks, bonds, mutual funds, etc. for growth. If used for qualified college expenses withdrawals are tax-free. (You may get a state-tax deduction on contributions too, depending on your state.)

  • You can withdraw $10,000 tax-free each year for K-12 education expenses.

  • Make sure you research your specific state tax rules on K-12 withdrawals because they vary by state.

Again, this isn’t a comprehensive list and you should be aware of the rules before taking any action. But if you’ve written off 529s in the past as being too restrictive, maybe it's time to revisit them!

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