How much can you contribute to a 529 plan & what does it cover?

Co-Founder and Chief Data Scientist

How much can you contribute to a 529 Plan? Every state sets a cap on the total amount of contributions per beneficiary. The cap is meant to offset the cost of attending college or graduate school. Also, a 529 Plan must include “sufficient protections" to avoid contributions in excess of what is required to cover the beneficiary’s future education costs. (IRS, n.d.-c)

Saving for college is vital for many families. A 2020 poll of parents in the United States revealed that 78% have started saving for their children’s college education, and 60% plan to reach their goals in saving for college. To boot, one in two respondents owned a 529 college savings account. (Fidelity Institutional Asset Management, 2020) If you are wondering who can contribute to a 529 Plan and how much the contribution can be, then here is a brief resource for your reference.

Contributing to a 529 Plan Table of Contents

What is a 529 Plan?
How much can you contribute to a 529 Plan?
Who can contribute to a 529 Plan?
Why should you consider investing in a 529 Plan?
What will the 529 Plan cover?
How can you use 529 plans alongside student loans?
What fees and expenses are associated with managing a 529 Plan?
How do you choose the right 529 Plan for your needs?
Which investment options are available in a 529 Plan?
What are the tax benefits of using a 529 Plan?
How do 529 Plans compare to alternative education funding strategies?
Can I adjust my 529 Plan if my beneficiary receives a scholarship?
Can 529 Plans fund online and nontraditional education institutions?
How Can Professional Guidance Optimize Your 529 Plan Strategy?
What happens to unused 529 plans?
What financial aid options complement 529 plans for education funding?
What are the risks of investing in a 529 Plan?
What additional expenses should families consider when planning for education costs?

How to Use 529 Plans alongside Student Loans

What is a 529 plan?

A 529 Plan is a state-sponsored program allowing families and friends to contribute to a beneficiary’s qualified higher education expenses at an accredited educational institution. It generally includes expenses related to the beneficiary’s enrollment or attendance at any post-secondary educational institution eligible for federal student aid. Apart from fees, the cost of college textbooks, supplies, and other equipment needed for participation in an apprenticeship program registered and certified with the Secretary of Labor are also covered.

Originally designed to pay for post-secondary education, 529 Plans can now fund private K-12 education and apprenticeship programs that are approved by the U.S. Department of Labor. (IRS, n.d.-c) As of 2021, 35% of American households that had been saving for their children’s higher education used 529 Plans (savings or prepaid) to save for college. (T. Rowe Price, n.d.) This is a leap from Sallie Mae’s 2018 report of 29% of parents using the same.

How much can you contribute to a 529 Plan?

Contributions on behalf of a beneficiary cannot exceed the beneficiary’s qualified higher education expenses. This amount is widely considered as being equivalent to five years of tuition, room, and board at the most expensive colleges in the U.S. This rule allows for significant investment contribution limitations. However, contribution limits may also vary per state.

529 Contribution Limit per State

Every state’s 529 Plan allows at least $235,000 per beneficiary. Georgia, Mississippi, and North Dakota have the lowest maximum balance limits at $235,000. Meanwhile, Idaho, Louisiana, Michigan, Washington, and the District of Columbia have maximums of $500,000. Pennsylvania sets a $511,758 limit, while South Carolina and New York both have $520,000 limits. Any donations made after the maximum is reached will be refunded to the investor.

The limits apply to each beneficiary. For example, in North Dakota, where the maximum contribution is $235,000, if parents give $200,000, grandparents cannot donate the same amount to the same beneficiary.

In some cases, investors who max out in one state may be able to contribute more in another. Still, individuals should first verify with plan administrators if this is allowed.

Gift Tax Exclusion

Under the annual gift tax exclusion, up to $16,000 per donor ($15,000 in 2021) can be contributed to a 529 Plan. Non-529 donations are included in the annual gift tax exclusion amount. As such, individuals may include any cash or property gifts in the total.

However, annual contributions in excess of $16,000 must be reported on IRS Form 709. The excess counts against the contributor’s lifetime gift tax exemption. Individuals can contribute up to $12.06 million tax-free in 2021.

5-Year Election

There is also an option for a larger tax-free 529 Plan contribution. Grandparents can donate up to $80,000. This can be applied as though it were a $16,000 per year contribution so long as there are no other gifts to the same beneficiary over the next five years. (IRS, n.d.-a) Note that each year of the 5-year election must be reported on Form 709.

Who can contribute to a 529 Plan?

Any individual can fund a 529 Plan account and name anyone as a beneficiary. There is no income restriction. Generally, there is also no age limit with age. Any adult of any age can start a 529 Plan, serving as both account holder and beneficiary. In 2020, savers aged between 45 and 54 years had the highest overall average balance at $38,490, and those aged 24 to 34 had $8,302 on average.

Contributions can be made on behalf of a beneficiary by parents, grandparents, aunts, uncles, stepparents, spouses, and even friends.

Why should you consider investing in a 529 Plan?

In “Higher Education: Can Debt Beat Savings?," a study published in the Journal of Student Financial Aid, Stackpole (2021) said that “Parents can redirect contributions from a 529 to alternative investment accounts. They can then allow their contributions to compound for decades and even generations longer while using debt to pay for college. After subtracting taxation and inflation and with no further contributions, the student potentially retires with significant wealth that is otherwise lost when using the 529."

However, while Stackpole’s argument does make sense, the fact still remains that 43.2 million student borrowers have an average debt of $39,351 each, and student loan debt is the second-highest debt category next to credit card debt. Of today’s college students, 65% are with student debt. (Hanson, 2021-b)

As such, a 529 Plan is still worth considering despite it also having minimal impact on financial aid eligibility. (SEC, n.d.) Here are reasons why families and friends should consider investing in a 529 Plan.

Tax benefits. If used for eligible education costs, a 529 Plan’s earnings are tax-free. Other withdrawals are subject to taxes and a 10% penalty. While contributions to a 529 plan are generally not tax-deductible, certain states offer varied tax deductions or credits for contributions to 529 Plans. To qualify for a state tax deduction or credit, individuals may invest in their home state’s plan. In exchange for giving up a tax advantage, several states may let nonresidents invest in their programs.
Plan options. The prepaid tuition and education savings plan are the two types of 529 Plans, Prepaid Tuition: Few states and colleges offer this plan, and they vary in detail. Still, they all allow contributors to lock in current tuition prices for a student who may not attend college for years. It grows in value over time, and withdrawals for tuition are tax-free. Take note that this plan may charge an enrollment or application fee and administrative fees. Also, it could lose money if the sponsor defaults on financial obligations. A 529 Plan may also pay less if the beneficiary does not attend a participating university. (SEC, n.d.)Education Savings Plan: This plan can be invested in various mutual funds, which the account holder may choose. The performance of those funds determines how much the account grows (or shrinks) over time. Withdrawals can be used for college and K-12 expenses. This plan may charge an enrollment or application fee, annual account maintenance fees, ongoing program management fees, and ongoing asset management fees. (SEC, n.d.)
Prepaid Tuition: Few states and colleges offer this plan, and they vary in detail. Still, they all allow contributors to lock in current tuition prices for a student who may not attend college for years. It grows in value over time, and withdrawals for tuition are tax-free. Take note that this plan may charge an enrollment or application fee and administrative fees. Also, it could lose money if the sponsor defaults on financial obligations. A 529 Plan may also pay less if the beneficiary does not attend a participating university. (SEC, n.d.)
Education Savings Plan: This plan can be invested in various mutual funds, which the account holder may choose. The performance of those funds determines how much the account grows (or shrinks) over time. Withdrawals can be used for college and K-12 expenses. This plan may charge an enrollment or application fee, annual account maintenance fees, ongoing program management fees, and ongoing asset management fees. (SEC, n.d.)
Secure money for college education. College tuition has grown significantly over the decade. The cost of undergraduate tuition, fees, lodging, and board at public and private institutions grew 28% and 19%, respectively from 200809 to 201819, after adjustment for inflation. (NCES, n.d.) The average cost of college in the U.S. has tripled in two decades at an annual growth rate of 6.8%. (Hanson, 2021a) With escalating tuition expenses, money saved for a child’s education may be worth less than tuition when needed, especially if saved in a standard savings account. The average national savings rate is 0.06%, well below the historical rise in tuition expenses. While nothing is assured, as Stackpole (2021) notes, investing in a 529 Plan helps protect and potentially grow money intended for college education.

What will the 529 Plan cover?

Each state operates a 529 Plan and establishes contribution limits. Since this plan is intended to fund college fees, the state sets an appropriate maximum that typically covers fees for undergraduates, books, computers, other essential equipment, and graduate fees.

For the Education Savings Plan, apart from the college expenses listed above, the 529 Plan can be used for K-12 expenses. However, for Prepaid Tuition, room and board and K-12 expenses are not covered. Also, the latter plan may have limitations regarding what college it can be used. (SEC, n.d.) All 529 Plan types do not cover personal and travel expenditures.

How can you use 529 plans alongside student loans?

Many families find that even with a 529 Plan, additional funding may be necessary to fully cover their educational expenses. In such situations, pairing a 529 Plan with student loans can be an effective strategy to bridge the financial gap.

One option worth considering is private student loans. They can supplement the tax advantages of a 529 Plan by providing the necessary funds for tuition, fees, or other costs not fully covered by the plan. For instance, detailed reviews like the one available for college ave student loans can assist families in understanding the offerings of private lenders and evaluating their terms for better decision-making.

Additionally, federal student loans may also complement 529 Plans. These loans often come with lower interest rates and flexible repayment options, making them a practical choice for many students. Families can use the 529 Plan to minimize the loan amount and strategically manage repayment post-graduation.

By leveraging both 529 Plans and student loans, families can optimize their funding approach while reducing the financial strain that often accompanies higher education.

Can You Change the Beneficiary on a 529 Plan?

Changing the beneficiary is allowed under most 529 Plan rules when shifting funds to another eligible family member without incurring penalties, provided the new beneficiary’s education costs remain qualified. Specific procedures and requirements vary by state plan, so it is essential to consult plan documentation and notify the administrator before making any changes. In scenarios where adjustments are needed to align with evolving educational goals, reviewing plan flexibility and complementing funding with alternatives such as student private loans no cosigner may optimize overall financial strategy.

What fees and expenses are associated with managing a 529 Plan?

Investors should carefully review fee structures since administrative, management, and underlying fund expenses can meaningfully affect long-term portfolio growth. Detailed comparisons of fee levels across state-sponsored options help in selecting plans that optimize compounding returns while minimizing hidden costs. Moreover, indirect expenses—such as account maintenance and trading fees—should be evaluated alongside explicit charges before committing to any 529 Plan. It is advisable to consult comprehensive resources and performance reviews to gauge competitive fee practices, including insights from reputable institutions like open enrollment colleges online.

How do you choose the right 529 Plan for your needs?

Evaluating a 529 Plan requires a detailed examination of state-specific benefits, fee structures, performance history, and plan flexibility. Review administrative fees and expense ratios to understand their long-term impact on returns, and compare these details across different state plans. Additionally, assess tax advantages unique to your state and the ease with which you can adjust beneficiary designations as your family’s needs evolve. For families weighing traditional education against alternative pathways, research factors such as affordability and convenience, including whether is online college cheaper.

Which investment options are available in a 529 Plan?

Many 529 Plans feature a range of investment options designed to align with various risk tolerances and time horizons. Investors can typically choose from age-based portfolios that automatically adjust asset allocations as the beneficiary nears college age, static portfolios that maintain a fixed allocation between equities and fixed-income instruments, or customized options that allow for a tailored mix of investments. Assessing performance histories, fee structures, and asset diversification is key to optimizing long-term growth. In some cases, selecting options that complement your broader education funding strategy—consider exploring opportunities such as the highest paying master's degrees for advanced study outcomes—can strengthen your financial planning without overlapping risks.

What are the tax benefits of using a 529 Plan?

While federal law does not allow for a deduction on contributions, many states provide tax advantages such as deductions or credits that can reduce your state income tax burden. Earnings within the plan grow tax-deferred and withdrawals used for qualified education expenses are tax-free, enhancing long-term growth potential. For a comprehensive financial strategy that considers both tax benefits and alternative education pathways like accelerated bachelors degree online, reviewing state-specific regulations is essential to maximize savings and ensure compliance.

How do 529 Plans compare to alternative education funding strategies?

Evaluating a 529 Plan against other education funding vehicles can help refine your overall financial strategy. Unlike custodial accounts or Coverdell Education Savings Accounts, 529 Plans offer tax-advantaged growth with the flexibility to adjust investment allocations over time. However, if immediate liquidity or broader investment options are needed, other accounts might better suit certain financial profiles. Additionally, some families address shortfalls by supplementing 529 Plans with debt options such as best private student loans, which offer competitive rates and variable repayment terms. Comparing these alternatives in terms of tax benefits, investment choices, and risk profiles is essential for tailoring a comprehensive education funding plan.

Can I adjust my 529 Plan if my beneficiary receives a scholarship?

If a beneficiary receives a scholarship or grant, IRS rules allow for a penalty-free withdrawal of an amount up to the scholarship value, although taxes may still apply to any earnings distributed. This adjustment can help tailor your overall education funding strategy, reducing reliance on 529 funds for tuition and shifting focus to covering remaining education-related expenses. It is important to verify the implications with a tax professional to ensure compliance and optimize tax outcomes. Consider evaluating other funding sources, such as When you get a student loan who gets the money?, to cover associated living expenses without disrupting the tax-advantaged benefits of your 529 Plan.

Can 529 Plans fund online and nontraditional education institutions?

529 Plans are designed to cover qualified tuition and related expenses at eligible educational institutions, including certain nontraditional settings. Accredited online institutions are eligible if they participate in federal student aid programs, ensuring that tuition, fees, and related costs meet IRS requirements. Families should verify the institution’s qualification with the plan administrator to secure tax-free withdrawals for education costs. For example, many online colleges accredited adhere to strict standards, making them appropriate beneficiaries under a 529 Plan.

How Can Professional Guidance Optimize Your 529 Plan Strategy?

Professional guidance can streamline decision-making by aligning plan selection, asset allocation, and tax considerations with your unique financial objectives. Advisors with expertise in education funding can evaluate state-specific benefits and complement 529 Plans with alternative financing options. Leveraging insights from specialized professionals not only minimizes oversight but also uncovers strategic opportunities unique to your situation. For additional expert insights on navigating competitive education options, consult the top college admissions consultants rankings.

What happens to unused 529 Plans?

There are instances when money in 529 Plans is not used up, and the reason for this could be any of the following.

The family saved more than necessary.
The beneficiary may have attended an institution with “no loans" financial aid packages.
The beneficiary may have attended an American military academy; thus, the government pays most of the educational tuition.
The beneficiary obtained a scholarship or employer-sponsored education.
The beneficiary skipped or failed college.
The beneficiary died or became disabled.

Withdrawal of left-over funds in 529 Plans can be made for any reason. However, expect the earnings portion of a non-qualified withdrawal to be taxed and penalized. To avoid paying taxes and penalties, here are what can be done to unused 529 Plans:

Change the beneficiary to another eligible relative.
Keep the monies in case the beneficiary wishes to go back to school.
Change beneficiary to oneself to further education.
Transfer funds to a 529 ABLE account, special savings account for a person with a disability.
Parents can withdraw up to $10,000 tax-free from 529 Plans for K-12 tuition.
Repay up to $10,000 in student loan debt per beneficiary and their siblings made possible as per the SECURE Act of 2019. The $10,000 restriction is a lifetime maximum. (IRS, n.d.-b)
As the last option, take a non-qualified distribution.

Non-Qualified Distributions

Non-qualified distributions are taxable at the recipient’s rate plus, a 10% tax penalty. State income tax advantages may also be recaptured to the extent they relate to the non-qualified distribution.

Meanwhile, since earnings are distributed proportionally, one cannot withdraw merely the contributions. A 529 Plan distribution can go to the beneficiary, the account owner, or the beneficiary’s college. A non-qualified payout paid to a college is taxed to the beneficiary, not the account owner.

For multiple 529 Plans, it is more reasonable to take a non-qualified distribution from the one with the lowest percentage profits, as the taxes and penalties are based on the earnings part, not the total payout.

Waiving Penalties

Nevertheless, penalties can be waived in certain cases. Kantrowitz (2021) cites the following reasons for waiving penalties.

When the beneficiary receives tax-free educational assistance (i.e., scholarship, veterans’ educational assistance, or employer-paid educational assistance), the tax penalty on a non-qualified distribution will be waived up to the amount of the tax-free educational assistance.
When the beneficiary attended a military academy, the amount waived is up to the cost of military education as specified in 10 USC 2005(d)(3).
When there are coordination restrictions with the American Opportunity Tax Credit (AOTC) or Lifetime Learning Tax Credit (LLTC), the waived amount is up to the expenses used to justify the education tax credits.
The beneficiary dies or becomes disabled.

Kantrowitz (2021) stresses that when the tax penalty is waived, investing in a 529 Plan is comparable to investing in a taxable account.

Take note also that there is no special provision allowing account holders to donate unused 529 Plan funds to charity. As such, this means left-over funds to charity will require taking a non-qualified distribution and paying taxes and a penalty on the portion of earnings.

What financial aid options complement 529 plans for education funding?

While 529 plans offer a tax-advantaged way to save for education, they are often just one piece of the funding puzzle. Families frequently supplement these plans with other financial aid options to cover the full cost of education. Understanding these complementary resources can help maximize your funding strategy.

Scholarships and Grants: These do not require repayment and are an excellent way to offset education costs. Many institutions and private organizations offer merit-based or need-based scholarships that can reduce reliance on savings or loans.
Federal and Private Student Loans: When 529 savings and scholarships fall short, loans can bridge the gap. Federal student loans often have lower interest rates and flexible repayment options compared to private loans. For more information, explore what banks offer student loans.
Work-Study Programs: Offered by many colleges, work-study allows students to earn money for education through part-time jobs, easing the financial burden.
Education Tax Credits: Families can leverage credits like the American Opportunity Tax Credit (AOTC) to reduce tax liabilities, further stretching their education budget.

By combining these options with a 529 plan, families can create a robust strategy to manage rising education costs effectively.

What are the risks of investing in a 529 Plan?

Like most investments and savings, there are also risks associated with a 529 Plan. Smith (2021) discusses the five pitfalls that relatives ought to avoid when investing in a 529 Plan.

Procrastinating: Postponing the 529 Plan investment is the first and perhaps biggest risk. As earlier mentioned, college tuition is rising fast, and without proper preparation, students could end up with debts. Smith (2021) suggests getting started as soon as possible with the 529 Plans so that when the child is ready for college, the money put in the first year will have compounded tax-free for 17 or 18 years. Parents could start a 529 account for as little as $10 or $15 and set up automatic monthly installments from bank accounts. Some employers may also provide a payroll deduction option.
Picking a poor fund: Smith (2021) notes that certain states’ funds do worse than others, with some having higher costs. Such funds could slow down 529 balance growth. Thus, it is better to choose a state-sponsored 529 Plan even if its performance lags or expenditures are greater. Of course, it is best to compare funds.
A market crash: The 529 account balance will have ups and downs like other investments. There is the risk of it being significantly down by the time withdrawals need to be done. In that case, Smith (2021) suggests diversification since not all accounts with various investments will be down at the same time. One can withdraw from a healthy account and let the ailing ones recover.
Prepaying tuition for the wrong school: There are no market risks with prepaid plans, and plan managers will decide how your money is invested. However, these plans still come with risks. Smith (2021) explains that states sponsor prepaid plans, but not all states guarantee them, so the investment may not go as far as one hopes. There is even the risk of losing it entirely. Besides, prepaid plans limit where a child can attend college. Generally, students can use the money to pay for tuition at another institution if they like. In that case, the plan may pay less than if they went to the institution for which they originally signed up.
Paying 529 money for non-qualified expenses: Individuals can withdraw funds from a 529 savings plan for reasons other than eligible college expenses, such as a financial emergency. However, doing so is not free. The withdrawal will be taxed at 10% plus, state and local taxes. The individual must also return any state tax deductions based on such contributions.

What additional expenses should families consider when planning for education costs?

While 529 plans cover a variety of educational expenses, families should be aware of other costs associated with higher education that may not be fully covered by the plan. These additional expenses can add up, and planning for them can help families avoid unexpected financial strain:

Personal and Living Expenses
- Even though some 529 plans may cover room and board for students enrolled at least half-time, there are still personal expenses to consider, such as clothing, toiletries, and entertainment. These day-to-day costs can vary significantly depending on the student’s lifestyle and location.
Transportation Costs
- Whether a student lives on or off-campus, transportation expenses can be substantial. This includes costs for car maintenance, fuel, parking permits, public transportation, or flights for students attending college out of state. These expenses are generally not covered by 529 plans, so families should budget for them separately.
Study Abroad Fees
- While 529 plans can be used to cover tuition and certain fees at eligible foreign institutions, additional costs associated with studying abroad, such as travel, visa fees, international health insurance, and excursions, may not be fully covered. Families should factor in these expenses when planning for an international education.
Health Insurance and Medical Costs
- Many colleges require students to have health insurance, which can be an added expense if the student is not covered under a family plan. Additionally, out-of-pocket medical costs, such as prescription medications or visits to specialists, may not be included in the health services provided by the college.
Technology Upgrades and Supplies
- While some 529 plans can be used for technology-related expenses like a computer, families should also consider the cost of maintaining or upgrading equipment, purchasing software, and replacing accessories (e.g., headphones, external hard drives) as needed.
Graduate School Exam Fees and Application Costs
- For students planning to pursue graduate studies, costs related to standardized tests (e.g., GRE, GMAT, LSAT), application fees, and other admissions-related expenses should be anticipated. These fees are typically not covered by a 529 plan.

Is a 529 Plan worth it?

So long as families and friends investing in 529 Plans are aware of and can work around the risks, investing in a 529 Plan to cover the cost of getting a bachelor’s degree or other post-secondary education could be worthwhile. Considering the findings of Stackpole (2021) would also help in determining if a 529 Plan will work with the family’s outlooks. Looking into the benefits and pitfalls of investing in a 529 Plan would be vital in deciding when to start and how much to contribute.

How much can you contribute to a 529 Plan? Any individual can donate as much as he or she wants each year to a 529 Plan, that is, as long as the state’s maximum contribution limit is not exceeded.

Key Insights

Contribution Limits: Each state sets a cap on the total contributions per beneficiary for a 529 Plan, generally ranging from $235,000 to $520,000.
Gift Tax Exclusion: Up to $16,000 per donor can be contributed annually without incurring a gift tax. Larger contributions can utilize the 5-year election option.
Eligibility: Any individual can contribute to a 529 Plan, regardless of income or age, and can name anyone as a beneficiary.
Investment Options: Two main types of 529 Plans are available: Prepaid Tuition Plans and Education Savings Plans, each with distinct benefits and risks.
Tax Benefits: Earnings in a 529 Plan are tax-free if used for eligible education expenses, with some states offering tax deductions or credits for contributions.
Flexibility for Unused Funds: Unused funds in a 529 Plan can be redirected to another beneficiary, used for K-12 tuition, repaid for student loan debt, or transferred to a 529 ABLE account.
Risks: Potential risks include market fluctuations, poor fund choices, and penalties for non-qualified withdrawals.

FAQ

What is a 529 Plan? A 529 Plan is a state-sponsored savings program designed to help families and friends contribute to a beneficiary's qualified higher education expenses, including tuition, fees, and related costs at accredited educational institutions. It can also cover K-12 education and approved apprenticeship programs.
How much can you contribute to a 529 Plan? Contribution limits vary by state, generally ranging from $235,000 to $520,000 per beneficiary. Annual contributions up to $16,000 per donor are excluded from gift taxes. Larger contributions can use the 5-year election, allowing up to $80,000 to be spread over five years without incurring gift taxes.
Who can contribute to a 529 Plan? Any individual, including parents, grandparents, aunts, uncles, stepparents, spouses, and friends, can contribute to a 529 Plan. There are no income restrictions, and any adult can start a 529 Plan and serve as both account holder and beneficiary.
Why should you consider investing in a 529 Plan? Investing in a 529 Plan offers several benefits, including tax-free earnings if used for eligible education expenses, potential state tax deductions or credits, and a way to secure money for escalating college tuition costs. It also has minimal impact on financial aid eligibility.
What will the 529 Plan cover? A 529 Plan can cover various education-related expenses, including tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. The Education Savings Plan also covers K-12 expenses, while the Prepaid Tuition Plan does not cover room and board or K-12 expenses.
What happens to unused 529 Plans? Unused funds in a 529 Plan can be redirected to another eligible relative, kept for future educational purposes, or transferred to a 529 ABLE account. Withdrawals for non-qualified expenses are subject to taxes and penalties, but penalties can be waived in certain situations, such as receiving a scholarship or attending a military academy.
What are the risks of investing in a 529 Plan? Risks include procrastinating on investing, choosing poor-performing funds, market crashes affecting the account balance, prepaying tuition for the wrong school, and withdrawing funds for non-qualified expenses, which incurs taxes and penalties.
Is a 529 Plan worth it? A 529 Plan can be a valuable tool for saving for education, offering tax benefits and potential growth. However, it is essential to understand the contribution limits, investment options, and risks to make an informed decision that aligns with your financial goals and educational needs.

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