Strategic Education Funding with 529 Plans
Education Funding for Future Generations
Education planning is one of the most meaningful ways to shape your family’s future. At Moran Wealth Management®, we work with families to position 529 Plans* as tax-advantaged tools within a broader wealth strategy.
*There is no guarantee that a 529 plan will meet its investment objectives or that investment returns will be sufficient to cover education expenses.
Tax-Efficient Wealth Transfer
Effective education planning calls for a disciplined focus on both growth and tax efficiency. We integrate 529 plans as powerful components of your overall strategy – helping to reduce potential estate tax exposure while seeking to maximize the impact of your gifts through thoughtful, strategic funding.
Multi-Generational Impact
Education is a gift that transcends a single lifetime. We help you structure plans that offer flexibility for children and grandchildren, aligning your financial resources with your family’s long-term success, values, and vision for future generations.
Key Potential Benefits of a 529 Plan
A 529 Plan is a state-sponsored, tax-advantaged investment account designed to help fund qualified education expenses. While often associated with college savings, these plans can also serve as a meaningful component of a comprehensive wealth management and education funding strategy.
Tax-Free Growth
Funds grow tax-deferred and may be withdrawn tax-free for education.
State Tax Advantage
Many states offer tax advantages that can enhance the value of contributions.
Flexibility & Control
Maintain control and change beneficiaries to eligible family members.
Estate & Asset Protection
Shift assets out of your taxable estate with potential creditor protection.
Choosing a Wealth Transfer Vehicle: 529s vs. Custodial Accounts
While both vehicles support gifting, they function differently within a comprehensive wealth management plan. It is important to weigh the benefits and trade-offs of each.
| Factor | 529 Plan | UGMA/UTMA Account |
|---|---|---|
| Asset Control & Flexibility | Owner Retains Control The account owner generally maintains control, including the ability to change beneficiaries among eligible family members. Funds are intended for qualified education expenses; non-qualified withdrawals may be subject to income taxes and penalties. | Control Transfers to Beneficiary Assets become fully accessible to the beneficiary at the age of majority (typically 18 or 21). These accounts offer broader flexibility for non-education spending but provide limited ongoing oversight for the original donor. |
| Tax Efficiency | Tax-Advantaged Designed for efficiency, with potential tax-free growth and tax-free withdrawals for qualified expenses, subject to IRS rules. | Taxable Investment Earnings are generally taxable, and income over certain thresholds may be taxed at the parents’ marginal rate under the “Kiddie Tax” rules. |
| High-Net-Worth Gifting | Accelerated (Superfunding) Allows you to front-load five years of gifts ($90,000 per individual / $180,000 per couple in 2024) in a single year, subject to filing Form 709. | Standard Annual Limits Typically limited to the annual exclusion amount ($18,000 per individual in 2024) and does not provide the same accelerated estate-reduction advantages. |
Advanced 529 Plan Strategies
For affluent families, a 529 Plan can be utilized as a tool for wealth transfer, offering significant gifting opportunities that may help reduce estate tax exposure while supporting future generations through strategic tax efficiency.
Estate Tax Reduction: Contributions are generally treated as completed gifts, removing assets from your taxable estate while allowing you to retain account control.
Accelerated Gifting (Superfunding): Front-load five years of annual exclusion gifts ($90,000 per individual in 2024) to jump-start compounding, subject to IRS Form 709 filing and recapture rules.
Broad Beneficiary Flexibility: Change beneficiaries to eligible family members (children, grandchildren, or extended kin) to fund education from K-12 tuition up to graduate programs.
Roth IRA Rollovers: Under SECURE 2.0, eligible unused funds can be rolled over tax-free to a beneficiary’s Roth IRA, converting excess education savings into long-term retirement security (subject to limits).
Strategic Investment Selection
Moran Wealth Management® advisors assist families in selecting appropriate portfolios, monitoring allocations as the beneficiary approaches college age, and integrating the plan’s strategy into the client’s overall investment portfolio.
Note: All investments involve risk, including the possible loss of principal.
Why Work With Moran Wealth Management®
While you can open a 529 Plan independently, integrating it within a larger wealth management framework can be complex. Working with a financial advisor may help ensure that details – from evaluating Florida 529 Plans versus out-of-state options to coordinating with estate and tax strategies – are managed with care.
Our Naples-based advisors take a holistic approach, working to align your education funding plan with your broader financial goals, including estate planning, tax management, and investment growth.
Plan for Their Future Today
Q&A
These include tuition, fees, books, supplies, and certain room-and-board costs for eligible institutions.
While assets in a 529 Plan are considered parental assets, they typically have a smaller impact on financial aid calculations than student-owned accounts.
You can change the beneficiary to another family member or use the funds for other qualified education expenses. Non-qualified withdrawals may incur taxes and penalties.
Yes, most plans allow investment adjustments up to twice per year or when you change beneficiaries.