Beyond Tuition: The 529 Plan as a Family Stewardship Tool

For many families, a 529 plan is seen as a straightforward savings tool for college. Simple. Purpose-built. Limited in scope.

But for those looking to approach legacy planning with greater flexibility and foresight, a 529 plan can serve as more than just a tuition bucket—it can be a meaningful part of a broader, multigenerational strategy.

That said, like any planning tool, it comes with considerations and trade-offs. This article is intended to explore both the potential advantages and limitations of 529 plans in the context of long-term family wealth planning.

A Flexible Way to Fund Education—While Retaining Oversight

At its core, a 529 plan allows contributions to grow tax-deferred and be withdrawn tax-free when used for qualified education expenses. These can include traditional higher education, K–12 tuition, and certain apprenticeship programs.

What sets the 529 plan apart is the degree of control it preserves for the account owner—something not typically available in other planning tools. With custodial accounts, gifts are irrevocable and eventually become the beneficiary’s to manage. Irrevocable trusts and other estate planning vehicles may require complex legal structures and restrict your ability to adapt. By contrast, a 529 plan generally allows you to retain ownership, decide when distributions occur, change the beneficiary if family circumstances shift, and maintain oversight over how the funds are invested—all without needing to amend documents or surrender control.

However, it’s important to note that investment performance is not guaranteed, and the value of the account may fluctuate based on market conditions. Additionally, non-qualified withdrawals are generally subject to ordinary income tax and a 10% penalty on earnings, and some states may impose additional penalties or recapture prior state tax benefits.

Strategic Contributions with Estate Planning Potential

Beginning in 2025, individuals may be able to contribute up to $95,000 per beneficiary (or $190,000 per couple) under the five-year gift tax averaging rule*—allowing significant funds to be moved out of an estate without immediate gift tax implications.

While this can serve as a powerful planning tactic, these contributions are considered completed gifts for tax purposes, and there may be implications if the donor dies within the five-year period (e.g., partial inclusion in the taxable estate). It’s also essential to coordinate these gifts with other aspects of a comprehensive estate plan to avoid unintended tax consequences.

SECURE Act 2.0: What Happens if the Funds Go Unused?

One of the most common concerns with 529 plans is what happens to unused funds. Under SECURE Act 2.0, a provision now allows for a limited rollover of unused 529 assets into a Roth IRA for the beneficiary—potentially turning leftover education savings into retirement assets.

As long as you follow the applicable limitations—and the 529 account has been open for the beneficiary for at least 15 years—up to $35,000 can ultimately be converted into Roth IRA savings.

This provision may be a helpful strategy for families with overfunded plans, but it is not automatic or guaranteed and must be carefully evaluated within the client’s broader financial situation.

Balancing Opportunity with Responsibility

529 plans offer flexibility, but they are not one-size-fits-all. They require thoughtful coordination with other aspects of wealth management, such as tax strategy, estate planning, and philanthropic intent.

Used appropriately, a 529 can help you:

· Fund education with tax efficiency

· Retain discretion over family assets

· Build in flexibility for future generations

But it’s equally important to understand:

· The limitations on investment options and rollovers

· The risks of market loss or penalties on non-qualified withdrawals

· The need for strategic alignment with your overall estate plan

Let’s Have a Conversation

At Resolute, we view a 529 plan as one component of a comprehensive wealth strategy. Our approach—guided by transparency, adaptability, and client-centered planning—helps families align financial decisions with long-term impact.

If you’re exploring ways to structure education savings as part of a broader legacy strategy, a 529 plan may be one of several options worth considering. Like all planning tools, its effectiveness depends on how it’s integrated with your goals and risk profile.

Reach out today to schedule a personalized consultation and explore how a 529 plan might complement your family’s legacy and estate planning strategy.

*This estimate is based on projected increases to the annual federal gift tax exclusion and is subject to change pending future IRS guidance. As of this writing, the IRS has not formally published the finalized gift exclusion limits for 2025.

The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.