529 Account

• Setting up a 529 account is a good way to save for a child's retirement
• 529 account earnings are not subject to federal tax nor generally state tax when used for qualified education expenses by the designated beneficiary
• Valid expenses typically include:  tuition, fees, books, room & board
• Can even include primary and secondary school education
• Contributions are not deductible at a federal level (some states may offer deductions
• Each state controls the investment options available (often they are limited)
• If earnings aren't used for qualified education expenses, the could be subject to tax plus a 10% penalty

529 Account Concerns

• Some people contribute to them instead of saving for retirement. You can't use the funds for retirement, so may run out of money once retired
• Placing money in a 401k might be a better priority - to take advantage of tax deduction & potential employer matching
• Money in 529 account may be counted when applying for needs-based financial aid;  Money in a parent's retirement account is not considered