529 Plans: How to Fund College Without Derailing Retirement
College costs keep climbing. A four-year degree at a public university can easily run $100,000-$150,000 including room and board. Most parents want to help. The question is how to do it without sacrificing their own financial security.
The 529 Plan
A 529 plan is a tax-advantaged savings account designed for education expenses. Contributions are after-tax, but the money grows tax-deferred, and withdrawals for qualified education expenses come out completely tax-free at the federal level.
Most states offer a state income tax deduction or credit for contributions. Qualified expenses include K-12 tuition (up to $10,000/year), college, and graduate school.
The 529-to-Roth Rollover
Time Is the Biggest Variable
Balancing Retirement and College Savings
One tradeoff families weigh: a child has several ways to fund college, such as a less expensive school, scholarships, part-time work, or loans, while there is no comparable way to borrow for a multi-decade retirement. Directing money to a 529 while leaving retirement accounts underfunded can also shift a support burden onto children later. How to balance the two depends on your circumstances.
The bottom line
A fully funded 529 does less for your children than making sure they won't need to support you in your 70s - which is why retirement is usually funded first.
What would you do?
Maya and Jordan have a 2-year-old daughter. They have $300/month for college savings and are debating between a 529 and a Roth IRA.
Your Move
Look up your state's 529 plan and check if it offers a state income tax deduction. Contributing even $2,000-$3,000/year captures that benefit. Use the 529 Calculator to model what monthly contributions would produce by the time your child is 18.
Sources
- Internal Revenue Service, Publication 970
Tax Benefits for Education (529 plans and education credits)
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.
Educational content only. Not financial, tax, or legal advice. Consult a qualified professional before making decisions based on your specific circumstances.
Last reviewed: April 2026