Meet the Challenge of Rising Education Costs—Tax-Free
Picture this: Bob and Lisa are successful small business owners in Northern Virginia, raising two energetic kids who already dream about college. They want to save early—but like many parents, they wonder how to do that strategically and tax-efficiently.
Enter the 529 Plan, a power tool in the modern parent’s financial toolkit.
Originally designed for higher education savings, Section 529 Plans, also known as Qualified Tuition Plans, have evolved into a flexible, tax-advantaged way to invest in your child’s future—from kindergarten to college and beyond.
Let’s unpack the latest updates and why a 529 Plan could be the most overlooked tax-smart move in your financial playbook.
What Is a 529 Plan (and Why Should You Care)?
A 529 Plan is a state-sponsored investment account designed to help families save for education. Here’s what makes it shine:
- Tax-Free Growth: Investments grow tax-deferred.
- Tax-Free Withdrawals: Funds aren’t taxed when used for qualified education expenses.
- Peace of Mind: Plans are legally backed by states or institutions, making them a reliable choice in uncertain times.
Imagine saving for 15 years and withdrawing your child’s tuition without paying a dime in capital gains. That’s the real power of a 529.
What Counts as a “Qualified Education Expense”?
Thanks to recent legislative changes—including a big expansion under the One Big Beautiful Bill (OBBBA)—qualified expenses now cover more ground than ever:
✅ For College:
- Tuition and fees
- Books and supplies
- Equipment and technology
- Special needs services
- Room and board (if enrolled at least half-time)
✅ For K-12 Education:
- Up to $10,000/year in tuition (doubling to $20,000 after 2025)
- NEW under OBBBA: tutoring, test fees, educational materials, and even specialized instruction
✅ For Apprenticeships:
- Tools and equipment required for the program
- Fees and supplies needed for certification
- In short, it’s not just a college fund anymore—it’s a K-PhD+ toolkit.
How Contributions Work (and the Hidden Estate Planning Perks)
Here’s a fun twist: although contributions aren’t federally tax-deductible, the tax-free growth still makes 529s attractive.
But the real ninja move?
Gift and Estate Tax Advantages
529 Plans qualify under the annual gift tax exclusion—currently $19,000 per individual (or $38,000 for married couples in 2025). Even better:
- You can front-load 5 years of contributions in a single year (up to $95,000 per child in 2025).
- It reduces your taxable estate while still giving you control over the funds.
That’s right—Grandma Terry can fund her grandkid’s education, reduce her estate, and still call the shots on how the money is spent. A win-win for legacy-minded families.
Who Can Open and Contribute?
Anyone. Parents, grandparents, uncles, friends—even neighbors if they’re feeling generous.
However, most accounts are owned by parents or grandparents who want:
- Control over disbursements
- Visibility into investment growth
- Confidence in long-term planning
💡 Pro Tip from JS Morlu: For families with significant assets, 529 Plans can play a strategic role in multi-generational wealth and tax planning.
Real-World Example: Why It Pays to Start Early
Let’s say Bob and Lisa invest $5,000 annually in a 529 Plan for their 5-year-old son. Assuming a 6% return over 13 years, they’ll have nearly $100,000 tax-free by the time he graduates high school.
Compare that to a taxable brokerage account—where capital gains and dividends could shave off 15–20% or more. The 529 Plan isn’t just an investment in education—it’s a tax-advantaged vehicle to preserve your hard-earned dollars.
Choosing the Right 529 Plan for Your Family
Not all plans are created equal. Each state offers its own version, and you don’t have to pick your home state’s plan.
Some things to consider:
- Fees and investment options
- State tax deductions (if applicable)
- Performance of the underlying funds
💬 This is where JS Morlu’s advisors come in: We help families evaluate options across states, align 529 strategies with broader tax planning, and avoid common pitfalls like overfunding or timing mismatches.
Why This Matters Now
With college tuition rising faster than inflation—and the recent OBBBA changes unlocking new flexibility—there’s never been a better time to integrate a 529 Plan into your financial strategy.
And for JS Morlu’s clients—whether you’re a small business owner, high-net-worth family, or non-profit leader—you’ll appreciate how a 529 can support your family values while optimizing your tax position.
Take the Next Step with JS Morlu
529 Plans are just one part of a comprehensive, proactive tax strategy. At JS Morlu, we go beyond number crunching—we help clients leverage every available tax advantage to build secure futures for their families and legacies.
📞 Ready to build a smarter education savings strategy?
Contact us today for a personalized consultation on 529 Plans and integrated tax planning.
TL;DR — Why 529 Plans Deserve Your Attention
| Feature | Benefit |
| Tax-free growth | No federal income tax on investment gains |
| Tax-free withdrawals | For qualified education expenses |
| Flexible use | Covers K–12, college, apprenticeships |
| Estate planning bonus | Front-load gifts and reduce your taxable estate |
| Control & flexibility | Owner retains control of funds |
Final Thought
In a world where education costs soar and tax laws shift constantly, the 529 Plan is a rare constant: flexible, smart, and powerful. Whether your child is five or fifteen, the time to start is now.
Let JS Morlu help you make the most of it.