Aug 21, 2026 · 37 min · 12 segments
Back-to-school season means education planning. The BIF team breaks down 529 plans, Coverdell ESAs, UGMAs/UTMAs, tax strategies, and the education funding calculations CFP® candidates need to know…
Jerry MeeHost
Tiffany GuyHost
Kaylee BentingHost
Jerry and Tiffany already touched on this a little bit, but for those of you who don't know, this is an education-focused savings plan for, ideally for your children, but the beneficiary can be unrelated.
And when we compare that with some of the other ones, that is a huge amount compared to the other ones.
The primary limitation with the 529 plan is that if you don't use it for qualified expenses, then the earnings do get taxed and you pay a 10% penalty.
One thing to note, though, if your child or beneficiary doesn't plan to go to college and use it for that, They can transfer it to another beneficiary, maybe a sibling.
Another note is that if your child gets a scholarship for the amount that they were planning to use the 529 for, they don't have to pay that penalty because they're You know, you saved all that much and they did their due diligence and got the scholarship.
Oh, so when my son gets that baseball football scholarship, like he's assuring me that it's going to happen, I won't get that penalty on that 529.
So if you have a client scenario where they mention a 529 plan or that's one of the answer options, the key news is usually there's a clear education goal.
And compared with some other ones, there are some where the donor doesn't necessarily have control.
Jerry and Tiffany already touched on this a little bit, but for those of you who don't know, this is an education-focused savings plan for, ideally for your children, but the beneficiary can be unrelated.
And when we compare that with some of the other ones, that is a huge amount compared to the other ones.
The primary limitation with the 529 plan is that if you don't use it for qualified expenses, then the earnings do get taxed and you pay a 10% penalty.
One thing to note, though, if your child or beneficiary doesn't plan to go to college and use it for that, They can transfer it to another beneficiary, maybe a sibling.
Another note is that if your child gets a scholarship for the amount that they were planning to use the 529 for, they don't have to pay that penalty because they're You know, you saved all that much and they did their due diligence and got the scholarship.
Oh, so when my son gets that baseball football scholarship, like he's assuring me that it's going to happen, I won't get that penalty on that 529.
So if you have a client scenario where they mention a 529 plan or that's one of the answer options, the key news is usually there's a clear education goal.
And compared with some other ones, there are some where the donor doesn't necessarily have control.
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