529 plans FAQs

There is no maximum age for a 529 plan owner or beneficiary. Assets in a 529 account may be withdrawn tax-free for a beneficiary of any age to pay for any qualified education expense including college, graduate schools, and vocational/technical schools. In fact, you can be your own account’s beneficiary. If your school is eligible, you can use 529 plan assets – even if you are not attending full-time.

You can invest in ANY 529 savings plan from any state. However, some states may offer 529 plans that provide taxpayers with state tax and other benefits that are only available through the home state’s 529 plan. You can use the plan assets at ANY eligible school around the country and abroad.¹

With few exceptions, there are no limitations on who can be account owners or beneficiaries.² Trusts, corporations and custodial accounts with valid tax ID numbers may also be account owners.

For most 529 plans, anyone can contribute to an account that has been set up. Most 529 plans will allow only one account owner for each beneficiary, but other family members and friends can contribute.

Unlike other education savings vehicles, 529 plans do not have income limitations.

Account owners can set-up as many accounts as they’d like – one per beneficiary – and can fund up to the maximum contribution level, which is often over $500K.³

529 plans are flexible. You can use your account assets to pay for many qualified education expenses, including tuition expenses up to $10,000 annually for K-12 public, private or parochial schools,⁴ student loan repayments,⁵ room and board,⁶ mandatory fees, books and supplies, and more!

A 529 plan has a relatively small impact on federal financial aid eligibility because 529 assets are considered assets of the account owner, rather than the beneficiary. When the parent is the account owner, 529 assets are factored into the expected family contribution rate (5.64%), the same rate as any other parental asset.⁷

Unlike other education savings and investment options, a 529 account owner controls the account. That means the account owner can change the beneficiary to another eligible “member of the family” (as per IRS rules). There are generally no distribution time or age limitations.⁸ Hold onto the plan as long as you’d like or pass down the plan assets to future generations. 529 assets can also be returned to the account owner as a non-qualified withdrawal, but earnings will be subject to a 10% federal penalty as well as federal, state and local income tax. Starting in 2024, SECURE 2.0 allows for a 529 plan account to be rolled over to a Roth IRA for the 529 account’s designated beneficiary. Transfers are subject to an aggregate limit of $35,000 with respect to the designated beneficiary.⁹

Yes, but there are several considerations you should be aware of before doing so. If you are in a custodial role for a minor with a UGMA/UTMA, you may move some or all of the UGMA/UTMA assets to a 529 plan, provided that the minor remains the beneficiary of the new account. However, prior to transferring the assets, you must liquidate funds from the UGMA/UTMA account and should discuss any resulting tax consequences with your financial professional. Finally, as an UGMA/UTMA custodian, you must notify the 529 plan when the beneficiary reached the legal age of majority, which is 21 in most states.

529 plan contributions are free of gift taxes and can help reduce potential estate taxes. Per beneficiary, individuals can contribute a maximum of $18K annually ($36K for married couples) or choose one-time accelerated gifting of five years ($90K/$180K).¹⁰ For gift tax purposes, the assets are considered completed gifts, but the owner of the account controls the assets and withdrawals.