Optimal Relationships Daily - Dating, Marriage and Parenting 2784: Who Should Contribute to a 529 Plan by Wanderer of Millennial Revolution on Smart College Savings Decisions
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Nov 2, 2025 Explore the surprising downsides of 529 college savings plans, which may not be the financial boon they seem. Discover how their strict rules can leave families financially trapped. Learn why Roth IRAs might be a better choice for tax-free education funding without penalties. Consider the limited benefits of prepaid tuition plans and hear reflections on the value of children contributing to their own education costs. Get practical tips to help parents make smarter financial decisions for their kids’ futures.
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529s Aren't Like Roths When Kids Skip College
- A 529 looks like a Roth but forces tax-free withdrawals only for qualified education expenses.
- Non-education withdrawals split principal and earnings and trigger income tax plus a 10% penalty on earnings.
Conversation That Sparked Skepticism
- Wanderer learned 529 complexity after talking with Jeremy from Go Curry Cracker who skipped a 529 for his kid.
- That conversation revealed real situations where 529s make no sense.
State Rules Make Or Break 529 Value
- Some states have no income tax, others disallow 529 deductions, and others provide them; state rules change the math.
- 529 usefulness depends heavily on your state tax situation.