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Planning for educational expenses can feel overwhelming, but May 29th (5/29) offers the perfect opportunity to take a smart financial step: opening a 529 Plan for Your Child’s Education. Designed with families in mind, these tax-advantaged accounts help parents secure their child’s academic future without derailing other financial goals. Here’s everything you need to know about why starting or reviewing a 529 plan now can make all the difference for the years ahead.
What Is a 529 Plan?
A 529 plan is a state-sponsored, tax-advantaged investment account that allows families to save for educational expenses. Originally focused on college costs, these accounts can now be used for K-12 tuition (up to $10,000 per year) and even for student loan repayments and certain apprenticeship programs (IRS, 2024).
Contributions to a 529 plan grow tax-free, and withdrawals used for qualified education expenses are also free from federal income tax. Many states also offer tax deductions or credits for contributions (SavingForCollege.com, 2025).
Why 5/29 Is Symbolic—And Practical
May 29th, or 5/29, has been adopted nationally as “529 Day,” making it a symbolic and strategic time to open or fund a 529 plan. Many states and financial institutions offer special incentives during this period, including matching contributions and fee waivers. For example, in 2025, several states such as Pennsylvania and Ohio offered bonus contributions for accounts opened on or around 5/29 (CNBC, 2025).
Top Benefits of a 529 Plan
1. Tax-Free Growth and Withdrawals
Earnings within the account grow tax-free and are not taxed upon withdrawal if used for qualified education expenses.
2. State Income Tax Benefits
Over 30 states offer tax deductions or credits for contributions to 529 plans. In 2025, the average deduction cap ranged from $3,000 to $10,000 per year depending on the state (Morningstar, 2025).
3. Flexibility in Usage
529 plans can now be used for:
- K-12 tuition (up to $10,000/year)
- Apprenticeship programs
- Student loan repayment (up to $10,000 per beneficiary)
4. Low Impact on Financial Aid
Parent-owned 529 plans are considered parental assets and typically reduce need-based aid eligibility by only up to 5.64%. Grandparent-owned plans don’t count as assets but can impact aid if distributions are made before the student’s junior year (U.S. Department of Education).
5. Transferability
Unused funds? No problem. You can:
- Change the beneficiary to a sibling or even yourself
- Use up to $35,000 toward a Roth IRA for the beneficiary starting in 2024 (SECURE 2.0 Act)
- Withdraw the equivalent of scholarship funds without a penalty
How Much Should You Save?
Coach Andrew recommends estimating your child’s future education costs using tools like College Board’s calculator and working backwards to determine your monthly contribution. For instance, saving $250/month starting at birth could yield nearly $90,000 by age 18, assuming a 6% average annual return.
What If a 529 Plan Isn’t Right for You?
Alternatives include:
- Coverdell ESAs (max $2,000/year, broader investment choices)
- Roth IRAs (used for retirement but can be tapped for education penalty-free)
- Brokerage Accounts (more flexible but no tax perks)
Each option has trade-offs. A Financial Wellness Coach can help assess your situation and select the right vehicle.
Common Myths Debunked
Myth: “I’ll lose money if my child doesn’t go to college.” Truth: You can change the beneficiary or even roll unused funds into a Roth IRA (from 2024 onward). And if a scholarship is received, you can withdraw an equivalent amount penalty-free.
Myth: “529s hurt my financial aid.” Truth: The impact is minimal compared to other savings vehicles.
Real Families, Real Impact
Last year alone, over 2,800 families worked with Financial Wellness Coaches to create personalized education funding strategies. Many reported reduced stress and increased confidence after setting up 529 plans.
“We opened our 529 on 5/29 and received a $100 bonus from our state program. We feel more in control of our child’s future now.” — Emma R., Michigan
Ready to Act?
Don’t wait another year. Every month counts when it comes to compounding returns. Talk to a coach, explore your state’s 529 plan, and start building your child’s future today.
Ready to take the next step? Discover 7 Essential Personal Finance Tips for College Students