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  • Writer's pictureJeff Boron

When to Start? How Starting a 529 Earlier Can Save You $$$

We are always here to help answer your questions, but we also like to try and provide useful insights here on the blog as a way of helping parents and families better understand the college planning process. There really isn't a time that's "too early" to start saving for your kids college, but the reality is there are a lot of things that life throws at us that prevent us from looking into a 529 plan as an option. This is very common, and if you haven't ever considered a 529 or know what it is, you're in the right place!

What is a 529 Plan?

A 529 plan is an investment account that offers tax benefits when used to pay for a qualified education expenses for a designated beneficiary. You can use a 529 savings plan to pay for college, K-12 tuition, and even student loan repayments. There are over 100 different 529 plans available to suit a variety of needs.

Why Should I Have One?

To best understand your personal situation, we do recommend reaching out via our form or by giving us a call, but the most basic answer to this question is it's going to save you money on taxes. You are able to load money into your 529 plan, but similarly to a Roth IRA or Roth 401(k), offers the ability to be withdrawn tax-free. (if used for qualified higher ed expenses)

Am I Too Late to Start?

If you are just thinking about getting a 529 started the year before your child is applying for college, the reality is you may be behind the 8 ball a bit. The positive news is that you are not alone in this process and many people don't know the many benefits that a 529 plan can provide. Don't beat yourself up for not having time to get started, share the wealth of info with someone else and help someone else!

According to Ascensus, the majority of 529 plan account owners in 2019 was between 35-44.

Source: Ascensus, as of 12/05/19

Let's say 2 parents have a kid around 25 and wait until 40 to start saving for college. That's 15 years of potential tax-free compounding they are missing out on.

I've Heard of People Giving "529 Gifts"

You may have heard of friends or family or other families at school that utilize a 529 plan for milestone gifts from grandparents and other forms of income as a child grows from Birth. Many times people utilize funds from religious milestones, graduations, birthdays, etc to send the money DIRECTLY into the 529 fund so it can be used in the future TAX-FREE for college.

This chart below demonstrates the average 529 plan Account Balance by age group. You can assume the person under 25 has not planned on their kids college yet, but is probably their allotted balance from their parents smart planning for them.

Source: Ascensus, 12/05/19

This is just the tip of the iceberg when it comes to planning for college. Hopefully some of the information we presented today is helpful for you, (or at least maybe someone you know!) and we look forward to any questions you may have about setting up a 529 savings plan. If you want to learn more about what Jeff Boron and Send Your Kids to College can do for you, please don't hesitate to reach out via our contact form or just give us a call anytime! We look forward to meeting you!


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