Unsolicited

Is A 529 Plan Worth It?

• Keith Wilson and Anthony Ruffalo

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We dive into the world of 529 college savings plans, exploring their tax advantages, flexibility, and potential for creating generational wealth. This educational episode clarifies common misconceptions and provides practical advice for families considering this powerful financial tool.

• 529 plans offer tax-free growth when used for qualified educational expenses
• Qualified expenses now include K-12 tuition, student loans, and apprenticeship programs
• Plans work best with a long investment timeline, ideally starting when children are very young
• There are multiple options for unused funds, including changing beneficiaries or Roth IRA rollovers
• The 10% penalty is waived for scholarships, military academies, and other specific situations
• Starting early can create significant generational wealth by eliminating future student loan burden
• Proper planning can minimize tax impact even if funds aren't used for education
• Parents should prioritize their own retirement savings before funding education accounts

Remember to subscribe to the podcast to hear more information to help you pursue your financial goals.


How to get in touch with us:

Keith Wilson keith.wilson@lpl.com

Anthony Ruffalo: anthony.ruffalo@lpl.com

check out our websites!

Keith Wilson https://www.wfa-nc.com/

Anthony Ruffalo: https://ruffalowealthmanagement.com/

Our YouTube Channels

Keith Wilson: https://www.youtube.com/@ThatFinancialGuy

Anthony Ruffalo: https://www.youtube.com/@anthonyruffalo2704

Speaker 1:

Mr Anthony Ruffalo, certified. Go ahead and say it.

Speaker 2:

Certified financial planner.

Speaker 1:

Thanks for being with us today again for our podcast, Unsolicited. You have to be here. You're the co-host.

Speaker 2:

What's up, my friend, I can't do this.

Speaker 1:

I can't do this by myself. Sure, you could.

Speaker 2:

It's not that complicated.

Speaker 1:

For the three people that are listening. Is it that many? For the three people that are listening, is it that many? Well, last podcast you said for the three people that are listening, it's up to six.

Speaker 2:

All right, look at that. It's a what a double.

Speaker 1:

It's 100% growth rate, we're gaining ground. So this is what I want to talk about today. What do you want to talk about today, keith? I am seeing a lot of this with the younger families coming in and really over the years, Isn't every family younger than you?

Speaker 2:

No, I mean, do you really have any families that are older than you, that are still alive, that are not in a graveyard? Yes, I do. It never gets old making fun of your age all right so what do?

Speaker 1:

you want to talk about 529s, let's go, let's 29 yeah, 529 planes is what I want to talk about, and, and specifically 529 planes because you tell me, if you hear this, so again, young families, they're starting out, maybe they're got an infant, a three-year-old, a four-year-old, and college planning is on their mind, because they want to start early, which is fantastic. And they hear, maybe they do a little research, college planning, college education, funding, and they hear the term 529 plan. So they've got, they've got enough to hurt them as far as the knowledge is. That's why they come in and say, okay, keith Buffalo, anthony, is a 529 plan worth it? That's the question I pose to you, young sir.

Speaker 2:

Yeah, is it fine? So I'm going to tell you right out of the gate I am biased in the fact that I love 529 plans and I think that there's a huge lack of understanding in the marketplace about them and I think there's also competing dollars for them. So people get talked out of funding 529 plans by the captive insurance agents that want to sell the whole life, or the VUL or the IUL to fund the college, to capture those contributions and make a commission. I think you got a lot of competing dollars out there in the marketplace and then you also have some people out there that will push you away from them because they don't necessarily understand the rules and the outs on the back end, because there's a lot of nuances.

Speaker 2:

I think there are a lot of fantastic tax advantages and there are several outs, so to speak, and so let's just say you have an unused 529 plan. If you understand the actual tax liability on the back end and how to navigate that, it's really not that big of a deal on the back end anyway.

Speaker 2:

You can't pull up and you compare it to what you would have been paying if you didn't get the tax deferral over 10 or 15 or 20 years. Now I just wrote a lot of generalities there and also let me throw this caveat out there I do not sell 529 plans.

Speaker 1:

I want to get into that because there's state sponsor plans where you can, as the investor, as the parent, you kind of do it yourself. There are advisor-driven plans as well, yes, so before we get into that, let's let our six listeners know what is even a 529 plan? And you touched on it. It's essentially a tax-advantaged savings account for education. So the contributions that you make, you do not, unlike a 401k, you do not get a federal income tax deduction. Some states offer a state income tax deduction if you purchase their own in-state plan their own in-state plan, Like my state here in South Carolina.

Speaker 2:

if you use the South Carolina state plan, there is a state income tax deduction for contributions to the South Carolina state plan. There is no federal, so money goes in on an after-tax basis and then it grows on a tax-deferred basis. As long as you use it for qualified educational expenses, I'll turn it back over to you.

Speaker 1:

And those qualified educational expenses include what you would think it would include tuition, room and board, books, supplies, even a laptop computer that they're going to use for eligible expenses in an accredited college. And I'm going to get back to other expenses, but let's stick with the college first. So the average in-state national tuition and room and board is pushing $27,000, $28,000 a year. Pushing $27,000, $28,000 a year. So people say, well, I want to fund that for my child's education. So college is one, but they've opened it up with a secure act and other things. It used to be, that's it. Those are the only eligible expenses that you can withdraw money from this account and pay zero taxes on the growth and zero penalty.

Speaker 2:

Yeah. So pause there. So let's just say just. Let's give the listeners a very simple example to follow. Let's say you have a one-year-old and you put $10,000, you make a $10,000 contribution to the plan and that contribution gets invested into whatever funds there's usually a lineup of funds similar to a 401k. There's a limited lineup of funds that are available inside of the plan that's offered by the individual state and then you invest it in the market. Obviously, it's not without risk. It gets invested into the market.

Speaker 2:

Let's say you pick something very simple like an S&P 500 index fund or a small cap or a mid cap index fund and hypothetically that $10,000 doubles to $20,000 by the time the kid gets to college. Now, hopefully it does more than double. But to keep it very simple, so the tax advantage to the plan is your contribution was 10 and you have $10,000 in growth. The plan is worth 20. If you took it all out to pay for a qualified education expense, you will not pay a dime in taxes on the $10,000 worth of growth. That is the big tax advantage.

Speaker 1:

No tax throughout the years as it's growing, no tax coming out or penalties if used for that eligible expense for college. But there are other eligible expenses that they opened up Private tuition, k through 12, $10,000 that you could withdraw to pay for that. What if the kid and you never know? At age one you don't know what this is going to happen. But what if the kid's a brainiac?

Speaker 1:

They got a full rod scholarship. You can pull the money out even though they don't need it and avoid the 10% penalty. But in that situation you would still pay tax but you wouldn't have the 10% penalty because if you withdraw for anything, that's not eligible tax on growth and a 10% penalty on the growth. So you can avoid the 10% penalty if they get a full ride scholarship and then the K through 12 tuition $10,000. That's the other thing and they open it up for sometimes the 529 plan is not enough to cover the tuition and the kid's got to get a student loan. You can withdraw to pay on a student loan up to $10,000. So there are other caveats to that. It's not just for college and yeah, we'll get into this next, which is the Rolf.

Speaker 2:

One thing I tell people, to keep it really simple, is that if you have an athletic kid, if you have a smart kid, or if you have a kid that's dedicated to our country, that wants to serve, you're not going to be penalized for those three things.

Speaker 1:

That's a good way to put it. And they've opened it up to the Roth. So if there's money left over in the 529 plan after they graduated or if they didn't go to school, it doesn't matter you can take money out and fund a Roth IRA for the child. There are some rules on that. It can only be up to the contribution limits. It's not like you can put 100% of the money in for the child. There's some rules on that. It can only be up to the contribution limits. It's not like you can put 100% of the money in for the Roth. Current contribution for their age would be $7,000. And you can do it cumulatively. $35,000 can go into that Roth over a number of years. And the other caveat they've got to have that opened for 15 years. It doesn't mean it, just you have to have it been open for 15 years. So there's some ways out. Now that's what it's about. Is it worth it?

Speaker 1:

Let's talk about when this thing really works and when it doesn't. So the plan really works when you have a long investment runway because you're starting early. Uh, I would say somebody and I've had this happen a lot of times people come to me my child's 16 years old. Should I start a 529 plan? Yeah, I probably not. You got two years.

Speaker 2:

Yeah, it's kind of late. Ship is sale.

Speaker 1:

Yeah, you just cash roll that, you just, whatever your contribution you were going to make, I would say just put it not. You know you're going to be investing conservatively because your horizon is two years before you're going to need the money. So it works far better, in my opinion, if you have that long runway, start early. The other times that it will work is if you're already on track with your own retirement, and you can speak to this as well as I can. Sometimes people get lopsided and they want to, you know, over-contribute to that 529 and pause on their own retirement. I think that's, in my opinion, a mistake, because you can always worst case scenario, you can always get a loan for college, you can't get a loan for retirement. So I want to make sure you're on track with your own retirement before the 529.

Speaker 2:

And educational. So the core part of my financial planning process, as you know, is I address three core areas Retirement, education and survivorship for my accumulators. And in the educational component, that number tends to surprise people from a cash flow perspective because it's compressed Retirement we're saving for 30 and 35 years. It's like amortizing a mortgage. Right, if you buy a house for $700,000 and you amortize it over 30 years, the payment's going to be much smaller than if you get a 15-year mortgage and you amort advertise it over 15.

Speaker 2:

So with college savings, usually people aren't starting them at age zero or one, it's usually like four or five and they're like, oh man, I got to get something going. And then guess what? It's 13 years. You got 13 years now, not 18. And that pushes that number up because you lost out on compounding interest. So for the educational component, yes, get started as fast as humanly possible. There's no reason why, if you know that you think you're going to have a family let's say you're married in your 20s and you're like, hey, between 25 and 30, we're going to just travel and have fun and enjoy being newlyweds and then we're going to start a family at age 30. There's no reason why you can't start a 529 plan at age 25,? Well, without having a child first, you can absolutely start a 529 plan in your own name and then just change the beneficiary late you know, down down the road to get a jump on some of that funding.

Speaker 2:

Now I know it's kind of a cart. You know you put in the cart before the horse. Now I don't see that too often, too often, but it is, it is. So that's kind of like one of those strategies that people don't really talk about all that all that often. You know it's cause. You know you gotta, you have to. There are several other components to a financial plan that you got to take care of first.

Speaker 2:

But if I'm working with a young couple and they've got all the boxes checked and they're saying, hey, you know what, we're on track for our own retirement, we've got emergency savings, we've got non-qualified money that we're putting away, we've got our life insurance taken care of, contributing to stuff at work, and they're really feeling good and they're like you know we're going to have a family. But you know, just another couple of years. I may throw that out there as a hey, get a jump on the funding Instead of spreading out that educational funding over 18 years, now maybe you spread it out over 22 years. And I absolutely love having a tax advantage account earmarked, just psychologically that you know. Hey, this is for college.

Speaker 2:

I've got 529 plans for both my girls and I love looking at the numbers and I know, hey, I'm set Like my girl's college, if I don't do anything else, is set now Like they're done. It's funded Now. Of course we still need to get some the count on the investment returns. But from a psychological accounting perspective it kind of checks a big checkbox for me and it makes me feel good as a parent. Sure.

Speaker 1:

Now let me ask you this share some clients. Well, I'll ask you point blank have you ever had a client with a 529? Well, you don't do 529 plans for your clients, do you?

Speaker 2:

No. So here's what. I don't sell them and I don't sell 529 plans.

Speaker 1:

What I do is I'll direct them to the state, to the state plan. Okay, same thing, it doesn't matter. So have you ever seen it from start to finish? No, someone started. I have several times, because I'm old.

Speaker 2:

Yeah, again, you're about 80 years old and you've gone through that cycle about three or four times.

Speaker 1:

I was about to say three or four generations, yeah, three great-great-grandchildren. No, I have seen where I recommended the FOB 29 plan, either in-state version or advisor-driven, it doesn't matter. We started the FOB 29 plan some as early as an infant, a birth less than one years old. Most of the time it's three, four, that's years old. That's when they start to click. And we did the planning of projections of how much to fund each month for each child. Then we got to answer the question do you want to fully fund, do you want a partial fund? And I've seen it all over the place, even fully funded. I've seen this thing work where they're calling each semester for the distribution and hey, we got tuition coming up. We need to take a distribution to pay for it, tax-free, penalty-free.

Speaker 1:

So I've seen the success of somebody actually going to college. I've seen somebody where they dropped out of college. They went for a couple of years, made the distributions, they dropped out and did something else. There's money left over. I've seen it where they did not go to college and the parent has funded some portion, maybe not fully. Hey, man, I've been plunking dollars down for you to go to college. I thought you were going to do it when you were three years old. And then here's this money left over. Um, so in those situations I've seen it where, hey, sally didn't go, but john is two years away. Let's change the beneficiary from sally to john all right.

Speaker 2:

so let me pause for a second. Let me ask you a couple questions. So in your process because you've been through the process from, essentially, inception of the plan to distribution of the plan, so when you started, what is your process for monitoring the projected values and how does that change over the years?

Speaker 1:

Okay, I think I understand what you're saying. So in the early years-.

Speaker 2:

You're like I don't know what this kid is going to be, I don't know where they want to go. I don't know, I don't know. Like, how do you even oh, oh, this is what we want to fund.

Speaker 1:

That's up to the client. So I ask that do you, is it? Is it your desire to fully fund their college education? Yes, all right, let's talk about the numbers right now it's do you if they're in state and we have no idea.

Speaker 1:

But we got to start with something. So I'm in North Carolina. Let's say they go to Chapel Hill, it's about 28 grand a year. If you go to Duke, it's like a hundred grand a year. But anyway we start there and say, all right, based on this projection we're going to have to do let's say it's at birth, maybe it's 350 a month.

Speaker 1:

Okay, if they're doing monthly contributions, some of them say, yes, it is my strong desire to fully fund it, and the reason is they just came out of a situation where they're saddled with student loan. They've got a successful career, though I don't want that to happen to them. Others say, nope, I want to maybe halfway fund it or even a quarter funded. I want them to have some skin in the game to fund this or no, I can't afford to fully fund it. So that's what we base the projections Investment wise. In the beginning. If we've got a long runway, we're 100% aggressive and it's almost. You could do target date funds if you wanted to. I don't recommend them. But periodically we're going to scale back as they're getting closer. We don't want it to be 100 percent stock and they're 17 years old.

Speaker 2:

Yeah, what my question is on the funding. So you start out and you're like hey age, I don't know if they're going to go to Chapel Hill or they're going to go to community college. So you arrive at you. How do you arrive at picking an amount to fund?

Speaker 1:

I asked them, and I start with the in-state tuition.

Speaker 2:

We have to start somewhere, so you start with the in-state tuition right, I start with the in-state tuition Four year full room and board in-state tuition, which is what you did, about 27,000 a year. Now 27, 28. Yeah, so if you're right now, if you're a parent and your kid is getting ready to go to a North Carolina four year in state, like away room and board, you're looking at about one hundred and five thousand bucks right now. Right, like that's that's, they're starting today. That's not 15 years of inflation. Right, that's today, that's there.

Speaker 1:

Well, the software that I use does that projection for me. But to your point, I've also had people midstream. We're changing our minds a little bit. Now they're the parent, maybe in their 40s versus early 30s. The parent may be in their 40s versus early 30s and that decade has given them experience to think differently. I think the wisest thing I'm speaking as the parent would be let's do two years of technical school, community college, get our credits and transfer. And Keith, can you run the numbers? If we stop right now, because community college is far less and sometimes we can say you're fully funded right now with growth if we're only going to do two years. So it's all over the place. As far as we got to start with what the parent actually is looking for and, just like any financial plan, it's dynamic and it's going to change.

Speaker 2:

Right. So you're adjusting funding along the way and from what I've experienced as well because I actually just had one of my longest tenured clients They've been with me about 14, 15 years they had 529 plans already I've just been helping monitoring the funding levels along the way and he said to me he's like we're getting ready to go, ironically, to Chapel Hill and he's like you nailed it. You absolutely nailed the funding level, the projections, yeah, the projections, and I look back and we've adjusted it probably every two years based on the returns. So, on the returns that they get, some years the returns were good and also some years they didn't make contributions that they thought they were going to be able to make. So you adjust based on the client's budget. Thought they were going to be able to make, so you adjust based on the client's budget. Some years they were really flush with cash because of bonuses and things just went well, and other years they didn't have what they thought they were going to have.

Speaker 2:

But as we got closer and closer, it was like the pressure kind of is on more and luckily we had a nice tailwind for the last decade with returns which really helped lift the accounts up, and then we also slowly started locking into the FDIC money market account to remove any market fluctuation. And they just kind of about three or four years ago there was a real good run and they just kind of topped up, topped up the account and I used the money market rate. I said, hey, listen, you know you're just about there. We had outperformance because of the market, let's lock it in. And that was it. We just kind of took the risk off the table. It was beautiful.

Speaker 1:

Have you ever had a client that regretted taking out a 529 plan?

Speaker 2:

no, I the only. I have had one instance, and these are very, very wealthy people where grandparents, way, I mean we're talking about a hundred million dollar net worth people, the, the, the upper generation. My clients were the parents of the children and the grandparents maximum funded. I don't remember the name, I think it was like a there's a there's a cap on five, 29 plans and I think back then it was like maybe 260, 200. It's like in the three hundreds now, but the grandparents maximum maximum funded each of the three grandchildren with like 200 and some odd thousand dollars.

Speaker 2:

This is about a decade ago and the kids never, the kids didn't use those, uh, those funds and the parents were a little bit, they were, um, they they were struggled to get the money out on and use it for the For their kids post college. They were. Just there was way too much. I mean I think there was almost a million dollars there and it was too too much money and I think that was that was a bit excessive A little, because they all went to public, they all went to in-state public schools they didn't go to. Had the three kids gone to private institutions, they would have been right on with the funding Right. I just want to clear something up about the maximum contribution institutions, they would have been right on with the funding, right.

Speaker 1:

I just want to clear something up about the maximum contribution. That varies from state to state. There's not one for federal, so some in-state plans not colleges, but in-state plans have their own. Some could be $235,000, could be $590,000. But yeah, I could see where that would be somewhat of a regret. I haven't had any with regrets. I've had some with money left over, not millions. And those that had money left over.

Speaker 1:

This is my advice. Okay, you're a parent, you funded the college, they're out of college, there's money left over. What do we do? Here's my advice, or things to consider. I should say If there's another child that's going through college at the time, or maybe they're in high school, you can change the beneficiary to them and let them use it. That's one. If there's not, consider the new Roth contribution with that money left over and I've done that several times, even though it's brand new where we just go from that custodian, the 529 plan. It's a Roth contribution. They've got to have earned income of at least what you're putting into it up to the contribution limit, which is $7,000. And cumulatively you can only do $35,000. And you've had to have it open for 15 years. So that's something with the money left over.

Speaker 1:

Another thing, and this is my regret, I had 529 plans on all three of my children. They're now adults and only one and a half of them went to college, if you understand what that means. And I had money left over. It wasn't a ton of money, okay, but it wasn't chump change. Wasn't a ton of money Okay, but it was, it wasn't chump change.

Speaker 1:

Um, I, I did change a beneficiary on one and eventually cashed out and paid the Piper. I regret just keeping those things alive, and this is why, a little over two years ago, I became a grandfather. If I would have kept those things alive, I could have then transferred the beneficiary to my grandchild. The amount of money that was going to go in there, yeah, it would have pretty much fully funded and she would have been okay, close to it anyway, close to it anyway, close to it and whatever. I didn't think my 22 year old at that time was going to have a baby. You know you don't think of that. Yeah, I would say keep that thing alive there. To my knowledge, there's not really a limit of how long I've heard 35 years or something like that to keep it alive, or you? I mean you can keep changing beneficiaries for the grandchildren, if you know, if you're a parent or even a grandparent. Um, I re. I really regret that, because as soon as my grandchild was born, I opened up a 529 and I'm funding.

Speaker 2:

Well, one thing here's one thing that I you know how I counsel clients and I tell my girls is we've got money set aside for college, for the family. So, yes, I show them the accounts. This is money set aside for your college, because I also want to encourage them to go to college. To go to college and knowing that it's it's funded, I think instill is helping, instill a sense of responsibility to take responsibility for your, your academics. So I talked to them about that. But I don't tell them it's your money, I tell them it's the family's money.

Speaker 2:

So, the family has put money aside for your education and, whatever it's going to be, we're going to take care of it. We're, we're, we're gonna, you know, we're gonna, we're gonna fund it. There may be some money left over, there may not be money left over, but I don't want them thinking that they're entitled to that money. If it is, if there's anything left over, because the way that I I look at it is that it is, I want, want it there, uh, generationally, um, either from my grand, either from my grandchildren, um, uh, or I don't know who else it could be, but for my, for my grandchildren, um, when it, when it comes up, or maybe, um, maybe a niece or a nephew. You know, help out a niece or a nephew because you, that's an easy beneficiary change to um to make and that's and that's a huge, that is a tremendous um, familial, generational wealth creation tool, because you've got the compounding interest is working for you on your side. And if that's $25,000 or $50,000, because I put $10,000 in and maybe it's grown to $30,000, it only cost me $10,000, where it would have cost the beneficiary not only 30, but if they have to borrow and then pay interest when they come out of college that could cost them $50,000. And then when you layer on the opportunity cost of hey, if I didn't have a student loan and I didn't have to repay the debt and I could have immediately come out of college and started investing that money, now you're talking about a difference of hundreds of thousands of dollars with my one initial investment of $10,000. And that's real generational impact. I'm not going to bore you with all the numbers, but I've laid out an example that I use with clients and a 50, just a $50,000 investment could turn into generationally, over 50 years, the difference of almost a million and a half dollars because of the opportunity costs of investing and the negative interest that they would have had on the loan payments to go.

Speaker 2:

So if you're fortunate enough I know not everybody is in the position, but if you're fortunate enough where you know you have the extra money and you can set it aside, I absolutely love 529 plans for just this reason, for creating familial generational wealth, and because we all know, yeah, there's different philosophies on on college, on education now, but I think we can all agree that education is a good thing.

Speaker 2:

Nobody will disagree. I know education isn't for everybody, because there are just some people that aren't hardwired to go to college and get a degree or, you know, become an expert, or you know a technician, or you know an attorney, a doctor, a lawyer, an engineer, a teacher. You know, not everybody's hardwired like that. There are definitely vocational people that are hardwired and learn differently and are happier doing different things and there's no shame in that and 529 plans can be funded for those as well, those technical certificates. But I think we can all agree that education in general it's a good thing, the more education that you have, and it will help you in life and as a patriarch of a family, I can't see how that could be a bad thing in order to fund that Love it.

Speaker 1:

I want to end with this. We're not going to get in deep. There are other alternatives. You could simply have a taxable brokerage account. You could have an UTMA account, but you have less control of that because the child gets that money where they go to college or not, at usually age 21. But for 529 plans, my opinion, I think they're the king. If it's for college funding, they're the king. And now, with all the less restrictions on it, the ways you can maneuver. In the event the child doesn't go to college, in the event there's money left over, as we talked about. So my take absolutely worth it, but only if it fits in your overall financial plan.

Speaker 2:

Yeah, I'll give you Keith who paid. If, let's say, you had leftover money in a 529 plan and you took the withdrawal, who pays the tax?

Speaker 1:

Yes, this represents a great tax planning strategy distribution direct to the beneficiary, even though maybe the parent's the owner. If it's paid directly to the beneficiary, the child, whatever age, is responsible for the taxes and the penalty on it, not the owner. Again, if it's paid direct to the beneficiary, the custodian can do that. So here's the planning strategy. Imagine this I'm 22 years old, I graduated college. There's money left over in the 529 plan that mom and dad did or you never went or you never went, it doesn't matter. Let's just pick a figure. Let's say there's 25 grand in there. Okay, all right, we're going to pay the 25 grand to the child that's added to their ordinary income tax. Well, let's say they don't have a job or they're very low income earners and they're in a very, very low income tax bracket, maybe a 0% tax bracket, which, if they are, if they're single, you know it's it's gotta be like, uh, under 10 or 12,000 or something like that Plus your plus, your, plus your standard standard exemption.

Speaker 1:

Your standard deduction maybe around 12, 13,000. There's a way that they would not pay federal income tax.

Speaker 1:

Or if you stretched out over a couple of years maybe do one in December and then one in January to empty it out. That takes a lot of tax strategy on that. So get with your tax advisor, cpa and all that good stuff, cover, cover your basis on that. But to your point, there is a way that you can pull money out distribution. Possibly it's got to be paid direct to the beneficiary and possibly avoid income tax, but no 10%. It depends on your income tax bracket for the beneficiary.

Speaker 2:

Listen. The point that I'm trying to make here is that if you have parents that are in a 37% federal bracket and there's leftover money, the parents don't necessarily have to get clipped at the highest federal rate. It could be 10%, 12%, 5% at the kids rate. The key is who the custodian makes the distribution payable to, and that's going to dictate what the 1099Q, whose name, is responsible for the taxes on the non-qualified distribution. That's it, seacrest, out.

Speaker 1:

All right. And again, that's a lot of tax strategy. And again, yes, I think a 529 plan is absolutely worth it if it fits into your financial plan. Seek financial help on that. But yeah, we love it. I think we covered our bases, as you said. Seacrest out, ruffalo, good to see you. That's it for Unsolicited for today. Thanks for listening. Be sure to subscribe or download or follow. Give us a rating. We need more than six followers to listen to this thing.

Speaker 1:

See ya Later Hard work really does come in payoff Every day working. We don't really need no days off.

Speaker 3:

Remember to subscribe to the podcast to hear more information to help you pursue your financial goals. Securities and advisory services offered through LPL Financial, a registered investment advisor Member, finra slash SIPC. The options voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This information is not intended to be a substitute for individualized legal advice. We suggest that you discuss your specific situation with a qualified attorney. This information is not intended to be a substitute for specific, individualized tax advice. Please seek a professional tax advisor.

Speaker 1:

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.