The cost of tuition continues to rise year after year with no signs of slowing down – and with lots of schools posting six-figure prices for a bachelor’s degree, saving for education is more important than ever! According to J.P. Morgan, tuition inflation has increased 914% since 1983!
I would like to share some recent updates around 529 Plans and remind everyone how beneficial they can be when saving for college. The big one is the updated state tax deduction for Iowa residents: up to $6,100 per adult, per beneficiary. This means a couple with two kids can deduct up to $24,200 on their 2026 Iowa Tax Return!
Less students are choosing a traditional 4-year undergraduate program by either skipping college all together, or by choosing alternative education paths. These include apprenticeship programs, trade school, beauty school, cosmetology school, etc. 529 Plan funds not only cover tuition, but they can also cover room and board, education materials such as books and computers.
Worried about overfunding? Don’t be, 529 Plans can be moved to a different beneficiary if they need more funds, or they can be rolled over into a Roth IRA in the beneficiary’s name to give them a headstart on saving for retirement!
Funding 529 Plans for your children or grandchildren can be a great planning decision, keeping you from accessing your retirement assets earlier than expected. In 2023, 41% of families paying for college leveraged their retirement plans to some degree according to J.P. Morgan.
Please reach out with any questions you may have about 529 Plans – happy spring (hopefully!) 😊
