Section 529 Plans

It’s already June, which means the 2023-2024 school year is close to wrapping up. Several of our clients (as well as a handful of us at Multnomah Group) have kids or grandkids in school, which brings up the topic of post-high school education and Section 529 plans (college savings plans).

Many of you are probably aware of the general benefits of Section 529 plans. For example, earnings in a 529 plan grow tax-deferred, and withdrawals are tax-free if you use the money to pay for qualified education expenses (i.e., tuition, books, school supplies, and room and board). Some states even offer tax deductions or credits for contributions to a Section 529 plan. Grandparents are especially interested in using a Section 529 plan as a part of their estate planning. Despite their advantages, the Education Data Initiative estimated that in 2023, only about 30% of savings earmarked for college were held in 529 accounts.

One primary concern we often hear from clients is whether a Section 529 plan will negatively impact a student’s eligibility for financial aid. Another concern has been around what happens if the child (or grandchild) doesn’t enroll in a qualified post-high school program. Fortunately, recent changes to the Free Application for Federal Student Aid (FAFSA) and certain provisions of the Secure 2.0 Act of 2022 have alleviated some of these concerns.

Let us know if you’d like to learn more about Section 529 plans and whether they might have a place in your financial plan. 

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

Comment On This Article