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Education | May 30, 2023

Summer is a Great Time to Go Back to School on Education Planning

Steven Kohler


Nancy I. Kunz


For most, summer means vacation and the end of another school year. It is also a favorable time to focus on contributions to your 529 education savings plans. Summer can offer more flexibility with reduced workloads and fewer financial obligations. Regardless of your children’s ages, any extra discretionary income contributed now to their 529 plans means more time to save and benefit from the compounding growth of your investment.

The Timely Benefits of 529 Plans and Summer Contributions

If you or your child will be applying for financial aid for the fall, then having funds in a 529 Plan can be advantageous. Since 529 Plan assets are typically considered parental assets for financial aid purposes, you can potentially position yourself more favorably for financial aid assessments. Continuing to fund your plan now has other advantages. While nobody likes the impact a declining market can have on the value of their investments, as was likely the case for most investors entering 2023, down markets can offer attractive opportunities to contribute to 529 plans and capitalize on future gains. Lastly, by contributing to a 529 Plan during the summer, you may maximize your potential tax benefits for the current tax year.

529 Plan Contribution Considerations

If you’re looking to fund your plan this summer, here are some guidelines and suggestions to consider:

Remain focused on your goals: This could include saving for college tuition, graduate school expenses, vocational training, or any other educational pursuits. It can be beneficial to establish education funding goals early in your children’s lives so that your investments can benefit from compounding and so that you are not “playing catch-up” as the time to make education expenses approaches.

  • Research projected costs: Consider factors such as tuition fees, accommodations, books, supplies and any other relevant qualified expenses. Remember to allow for cost inflation over time.

  • Create a budget: Try to dedicate a portion of your income specifically for education savings. Consider adjusting your spending habits and cut unnecessary expenses to free up more money for funding your plan.

  • Research financial aid options: Explore if you or your child is eligible for any scholarships, grants and student loans to determine if you may still need financial assistance. Be sure to check application deadlines and requirements.

  • Review your investments: Make sure your plan is still properly diversified across different vehicles to manage risk and reflect changes in the market or your time horizon. You do this with your retirement savings, why wouldn’t you do the same with your education savings?

SECURE ACT 2.0 and 529 Plans

If you are a devoted education saver, you recently received good news from Congress to consider this summer. Provisions in the SECURE Act 2.0 will allow for flexibility if the savings you have accumulated in 529 plans should exceed your actual funding needs. Effective in 2024, beneficiaries of 529 college savings accounts may rollover unused funds directly to a Roth IRA. This is a positive planning opportunity for families that overfunded 529 accounts for certain beneficiaries.
Several rules must be followed, however. To qualify for the rollover, the Roth IRA must be in the name of the beneficiary and the 529 plan must be established for 15 years. Additionally, the lifetime amount that can be transferred to the Roth IRA is $35,000 and is subject to annual contribution limits. Therefore, the rollover will need to be done over several years.
The United States Senate Committee on Finance issued the following rationale for the provision: “Families and students have concerns about leftover funds being trapped in 529 accounts unless they take a nonqualified withdrawal and assume a penalty. This has led to hesitating, delaying or declining to fund 529s to levels needed to pay for the rising costs of education. Families who sacrifice and save in 529 accounts should not be punished with a tax and penalty years later if the beneficiary has found an alternative way to pay for their education.”

Remember to consult with a financial advisor or tax professional to understand the specific rules and regulations governing 529 Plans according to your state and individual circumstances.


For parents or students who are actively engaged in college planning, summer can be an ideal time to evaluate your education savings plan to ensure that it still aligns with your goals and circumstances. Reviewing updated costs of tuition, fees, books and other educational expenses can help you estimate the amount of money you'll need. Be sure to consult with your financial advisor, who should be experienced in education planning, to get proper guidance tailored to your situation.

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Steven Kohler


Chief Planning Officer

Nancy I. Kunz


Senior Financial Advisor

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