Many states offer a tax deduction for investing in their 529 plans

529s vs. Roth IRA

Roth IRAs and 529 plans both offer tax advantages, but they serve different goals. 529s are state-run accounts meant for education, offering tax-free growth and withdrawals for qualified expenses. Roth IRAs are built for retirement, but can also be tapped for education, with more investment flexibility and fewer contribution limits.

529 plan advantages include state-specific tax exemptions and more

For National 529 Day, celebrated on May 29, an expert explained the basics of 529 accounts. Outside of forced education savings, advantages include flexibility around beneficiaries (they can be changed easily), how unused funds can be rolled into a Roth IRA, and state-specific tax exemptions.

Explore a guide to 529 college savings plans

Investors put after-tax dollars into these education-earmarked accounts, and like a 401(k) or IRA, they invest them into stocks, bonds, or funds. When it comes time to withdraw, investors do not pay any taxes on distributions. However, the money must be used for approved expenses like college tuition, textbooks, and trade schools.

9 states still offer prepaid tuition plans

Prepaid tuition plans, a type of 529 plan that locks in tuition rates when opened, are only offered in nine states for new enrollment. In addition to the nine states’ plans, there’s also a national plan for a network of 300 private colleges.

There are two main types of 529 plans

One type of 529 plan, prepaid tuition plans, can only be used to pay for tuition. The other type, college savings plans, can also be used to pay for related education expenses, including room and board. One key advantage of a prepaid tuition plan is that it locks in tuition prices. Both types have limited options for non-educational uses.

The IRS answers basic questions about 529 savings plans

The plans can be used to pay for any qualifying education expenses from kindergarten to college, including tuition, fees, room and board, and even computers. Anyone can set up as many 529 plans as they want for relatives, friends, or themselves.

The scope of 529 plans has expanded, but 529s still have some drawbacks

The tax-advantaged accounts can be used to pay for K-12 education, apprenticeship programs, and student loans, in addition to their original purpose: paying for college. But 529s have downsides, such as fees and penalties for non-qualified uses.

529 plans have some withdrawal penalties

The IRS imposes a 10% penalty on non-qualified withdrawals from 529 college savings plans, which hold funds for education-related expenses. However, there are exceptions to the rule, including if the beneficiary dies or becomes disabled. There's also an exception for beneficiaries that receive tax-free scholarships or attend military academies.

A parent explains 529 plans and why they decided to start one

The parent explains the basics of what a 529 is, its advantages, and how it works, breaking down portfolio options for investing in 529 plans using Vanguard as a provider.

How “superfunding” a 529 account works

Contributions to 529 college savings accounts incur gift taxes if they exceed preset annual limits. However, “superfunding” allows donors to contribute five years’ worth of the gift tax limit to a 529 account in one lump sum without paying additional taxes. That means individual donors can pay $90K into a 529 plan at once and still be exempt from gift taxes.

529 plans can affect college financial aid

Income affects FAFSA financial aid determinations. FAFSA also takes 529 college savings plans into account. The percentage of savings it uses in its calculations depends on who owns the account (parent, student, or someone else). Other schools use a program called CSS to determine financial aid, and those determinations vary.

Five mistakes experts see people make with 529 plans

In this podcast, financial experts review the top five mistakes investors make when it comes to this education investment vehicle. Some mistakes are true for all investments, such as periodically checking for new rules and regulations. Others focus on 529 plans and how to get the most out of them.

Contributing to a friend’s child’s 529 Account

A podcast listener asks about contributing to a 529 savings plan for their friend’s child. The hosts go over the basics of what a 529 is and how it works, and then give advice on how the listener can contribute, touching on how to have conversations about money with friends.

Most Americans take the standard tax deduction

A tax deductible is an expense that a taxpayer or business can subtract from adjusted gross income, reducing their taxable income and therefore reducing the amount of taxes owed. Governments often use tax deductibles as a way to reward people who do things that are considered beneficial to society, like charitable donations.

Only 5 states have inheritance taxes

Unlike estate taxes, inheritance taxes paid by the beneficiary of the estate (the person who inherits the deceased person's financial assets). The federal government doesn't levy an inheritance tax, but five states do. They all have varying tax rates and rules.

Connecticut recently became the first state to create and launch a baby bond program

The program invests $3.2K for a baby born after July 2023, who is covered by the state's Medicaid program. When the child turns 18, they can use the funds for college, retirement, to buy a home, or invest in a business.

Reinvested dividends are not a way to dodge paying capital gains taxes

When an investor holds stock in a company that pays a dividend—a portion of its profits directly returned to shareholders as monthly or quarterly payments—they can choose to hold that dividend in cash, spend it, or reinvest it into more shares of that company’s stock.

HSAs are triple-tax advantaged—offering tax-free contributions, investments, and withdrawals

One of the reasons HSAs are so popular is the plan's triple-tax advantage. All contributions to an HSA happen pretax, funds in the HSA can be invested in stocks, bonds, or exchange-traded funds, and withdrawals to cover medical expenses are tax-free.

State governments have public pensions for their employees

In many US states, these pensions are set aside for teachers, firefighters, and/or other state government workers. However, many of these pensions are currently underfunded. This map provides a visual representation of how strong each US states’ public pensions are.

Each state has its own regulations regarding marriage

Some states don’t even require a ceremony or license, opting to allow “common law” marriages. Prenuptial agreements and other legal matters will likely require an attorney’s help. And marriages can offer benefits, like tax breaks.

Annuities are regulated at the state level

However, certain types of annuities, like indexed annuities, are also nationally regulated by the SEC and the Financial Industry Regulatory Authority to protect investors.

Alternative investments carry unique tax implications

The specifics depend on the type of alternative asset, as well as how long you hold it for, and your income.

Many 'cheap' retirement destinations contain hidden costs

Considering factors outside of housing and state income tax is crucial when thinking of an inexpensive place to retire. High energy bills, grocery tax, and insurance premiums are just a few things to look out for when picking where to live.

Sports betting is legal in 47 states and the District of Columbia

This downloadable map provides an easy-to-see overview of each state's position on legalized gambling, including a breakdown of online versus retail betting. Click on a state, and a new page will provide information on what type of wagers are allowed, key regulations, tax rate data, and where that tax money will be allocated.

How to invest in silver

This article explains the value of silver as an investment opportunity—and explains the different ways you can invest in the asset. It also outlines the pros and cons of silver as an investment. To learn more about investing in silver, read this article.

Calculate how much of your tax dollars go to each federal program based on your income, filing status, and number of children

See this overview of the firework rules across all 50 states, ranging from a complete ban on non-professional fireworks in Massachusetts to states with more lax rules like Indiana.

44% of Americans say they pray at least once a day—discover how your state's religiosity stacks up against the rest of the country.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

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About 2,000 US babies are born annually without some portion of their limbs, potentially leading to a lifetime of pricey prosthetics.

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Jimmy Carter signed a 1978 bill that legalized home brewing, a move credited with kick-starting the craft beer industry.

Coral reefs get their colors from zooxanthellae—microorganisms that line corals' digestive tracts and provide them with sugars in exchange for a home within this protective tissue.

Between 10 million and 50 million people in the US develop rashes from poison ivy, poison sumac, and poison oak each year.

A researcher recently discovered an interview from 1967 between groundbreaking journalist Joan Didion and the Grateful Dead, years before the band became an institution.

While atoms are normally made of protons, neutrons, and electrons, exotic ones have been built with antimatter—alternate versions of normal matter that live for fractions of a second and are about a billion times as rare.