Planning Beyond College: How 529 Plans Can Create Multigenerational Opportunities
Education planning has evolved far beyond simply saving for a traditional four-year college degree. During her May By Your Side Chat, Jessica M. Geary was joined by John Yun and CaReece Norris of Capital Group to discuss how 529 plans can serve as powerful tax-efficient tools for families looking to invest in future generations.
For many families, the rising cost of education continues to create concern. John Yun shared that projected college costs could more than double over the next 17 years, with the estimated cost of a four-year in-state public university rising from approximately $93,000 today to more than $213,000 by 2042. That reality is pushing more families to proactively explore long-term education planning strategies.
One of the greatest advantages of a 529 plan is its tax-advantaged growth potential. Contributions grow tax deferred, and qualified withdrawals for education expenses remain tax free. John illustrated how even modest monthly contributions can create meaningful differences over time compared to taxable investment accounts, thanks to the power of compounded growth without annual tax drag.
Importantly, the discussion emphasized that 529 plans are not limited to parents saving for children. Grandparents, aunts, uncles, godparents, and even family friends can establish and contribute to accounts for beneficiaries. Jessica noted that many families use these accounts strategically as part of a broader wealth transfer and estate planning approach, helping move assets to younger generations in a tax-efficient manner.
The conversation also clarified that 529 plans are far more flexible than many people realize. While traditional college tuition remains a common use, funds may also be used for:
• Trade and vocational schools
• Certain international programs
• Study abroad expenses
• Qualified room and board
• Books and supplies
• K-12 private education expenses in certain situations
That flexibility allows families to support a wide variety of educational and career paths, whether a child pursues engineering school, a trade certification, graduate school, or another specialized educational opportunity.
Another major topic was the Pennsylvania state tax deduction available for contributions. Pennsylvania residents may currently deduct up to $19,000 per individual or $38,000 per married couple annually when contributing to a 529 plan. Beyond the immediate deduction, those contributions also have the potential to grow tax deferred over time.
The group also explored how 529 plans interact with financial aid planning. Ownership structure matters significantly. Parent-owned accounts are generally considered during FAFSA calculations, while grandparent-owned accounts may be treated differently. Jessica highlighted that thoughtful withdrawal sequencing between parent and grandparent-owned accounts can sometimes help families optimize financial aid eligibility during later college years.
One particularly valuable strategy discussed was “superfunding” a 529 plan. Under current rules, individuals may contribute up to five years’ worth of annual gift exclusions at one time. In 2026, that allows contributions of up to $95,000 for individuals or $190,000 for married couples without triggering federal gift tax consequences, provided IRS requirements are met. For larger estates, this strategy may also help reduce future estate tax exposure while accelerating education savings growth.
The panel also addressed one of the most common concerns families have: “What happens if the money isn’t used?”
Fortunately, 529 plans now offer several flexible options:
• Beneficiaries can be changed to many qualifying family members
• Funds may remain invested indefinitely if education is delayed
• Up to $10,000 may be used toward qualified student loan repayment
• Certain unused funds may now be rolled into a Roth IRA, subject to IRS limitations and eligibility requirements
The Roth IRA rollover provision generated significant interest because it creates an additional layer of long-term planning flexibility. Under current rules, up to $35,000 may potentially be rolled from a long-standing 529 account into a beneficiary’s Roth IRA, provided the account has been open for at least 15 years and annual Roth contribution requirements are met.
As with many planning strategies, the most effective use of a 529 plan depends on each family’s specific goals, tax considerations, estate structure, and time horizon. Investment selection, beneficiary structure, gifting strategies, and withdrawal timing all play important roles in maximizing the value these plans can provide.
If you are considering education planning for children, grandchildren, nieces, nephews, or future generations, our wealth management team can help evaluate how a 529 strategy may fit into your broader financial and legacy planning goals. Contact our office to schedule a conversation with a member of the SHC Wealth Management team.
*Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.