Celebrate 529 College Savings Day!
Celebrate 529 College Savings Day!
What We'll Cover
It feels like there’s a “holiday” for just about everything these days. I don’t remember growing up with celebrations like Houseplant Appreciation Day or World Introvert Day (both in January). February brings Feed the Birds Day and Tell a Fairy Tale Day. And of course, my personal favorite — National Coffee Day — comes around every October 1st.
May has its own lineup of quirky celebrations. But there’s one in particular that’s especially worth celebrating: 529 College Savings Day on May 29th!
A 529 plan is a state-sponsored savings plan designed to help families prepare for future education costs. It’s a powerful tool — whether you’re saving for your children, grandchildren, or another loved one. Here’s a quick overview:
Types of 529 Plans
Prepaid Tuition Plans: Lock in future tuition costs at today’s rates. The state invests on your behalf and guarantees your future credits, regardless of how much tuition prices rise.
Investment Plans: Choose from a range of investment options, from conservative (money market funds) to aggressive (international or emerging markets). You take on the investment risk, but you also keep all the potential growth. Historically, a well-constructed investment portfolio tends to outperform prepaid options over time, though returns are not guaranteed.
Tax Advantages
529 plans are often compared to Roth IRAs — and for good reason:
Contributions are made with after-tax dollars.
Investments grow tax-deferred.
Withdrawals for qualified education expenses are completely tax-free.
In addition, many states offer state income tax deductions. For example, in Virginia (where OLIO Financial Planning is based), each contributor can deduct up to $4,000 per beneficiary per year. A married couple saving for two children could deduct up to $8,000 per child — saving roughly $460 in state taxes annually.
Even if you didn’t get the deduction, the tax-deferred growth itself is a huge advantage. It means every dividend, interest payment, and capital gain stays invested and compounds without interruption.
A quick example:
Suppose you opened a 529 plan at your child’s birth with $2,500 and added $100/month. By their 18th birthday — assuming a 5% annual return — you’d have $41,058. Compare that to just $34,720 if you saved the same amount in a regular taxable account.
Flexibility You Might Not Expect
A common concern we hear: What if my child doesn’t go to college?
Good news — 529 plans are flexible:
You can change the beneficiary to another child, grandchild, or qualifying family member.
You can use up to $10,000 per year for K–12 tuition.
If funds aren’t used for education, earnings are subject to income tax and a 10% penalty — but your original contributions (unless deducted for state tax purposes) are always yours.
One of the biggest perks: the account owner controls the funds — not the student. In many other savings vehicles, the balance becomes the student’s asset at age 18, regardless of how it’s used. With a 529, you decide when and how the money is spent. No sudden “Corvette over Cornell” surprises!
What You Can Do Today
Here’s how you can plant your 529 savings tree:
Open a 529 account. If your state offers a tax deduction, start there. Many plans allow you to open an account with a small initial deposit.
Set a savings reminder. Remember to report your contributions on your state tax return — most plans won’t automatically send you a tax form.
Automate your savings. Set up a monthly contribution, even if it’s just $50 or $100.
Review your investments. Make sure your portfolio matches your child’s timeline. Consider age-based options or consult your financial advisor if needed.
Invite family and friends to chip in. Encourage loved ones to contribute to your child’s 529 in lieu of traditional birthday or holiday gifts.
The more you save now, the less you — or your child — will have to borrow later. And that’s a gift that lasts a lifetime.
The best time to plant a tree was 20 years ago. The second-best time is today.
College Savings Calculator
College Funding Calculator
529 Plan
$0
Brokerage
$0
Disclosures
The content on this blog is for informational and educational purposes only and should not be construed as personalized financial advice, tax advice, legal advice, an offer or solicitation to buy or sell any security, or a recommendation to pursue any specific investment strategy. The information provided is general in nature and may not be suitable for your individual circumstances.
Olio Financial Planning, LLC (“OLIO”) is a registered investment adviser with the United States Securities and Exchange Commission, domiciled in Virginia. Investment advisory services are only provided to investors who become OLIO clients under a written agreement. Past performance does not guarantee future results, and all investments involve risk, including the potential loss of principal.
Nothing contained herein should be interpreted as a guarantee of any specific outcome. Forward-looking statements or projections are based on assumptions and current market conditions, which are subject to change without notice. Actual results may differ materially.
You should consult your own financial, legal, tax, or other professional advisors before making any financial decisions. OLIO does not guarantee that the information presented is current, accurate, or complete, and assumes no responsibility for any errors or omissions.
